4 Recreational Retirement Expenses You Can’t Afford to Ignore

 
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Once people reach retirement age, their spending habits often change. Housing, healthcare costs, and daily expenses like groceries will still take a significant part of the budget, of course.

However, since retirement often means more free time, it may also provide opportunities to pursue activities and acquisitions that may not have been possible during the working years. If you’re retired or about to be, you may want to think about how to budget for general travel, a recreational vehicle, a vacation home, or hobbies.

Key Takeaways

• If you saved up enough for your retirement, you may want to start planning what to do with the extra income that your assets might generate.
• If you want to focus on a retirement that is leisurely or adventurous, budget funds for travel, including perhaps splurging on an RV for cross-country trips.
• Many retirees also take the opportunity to pick up new hobbies, or even purchase a second home.

1. Travel

The freedom to get in the car or take a bus or airplane to a faraway destination is one of the first things many retirees want to experience.

Still, others begin going on cruises or continue a life-long “cruise” habit with more intensity and seasonal flexibility this time around.

With the average cost of a vacation in the U.S. for two coming in at approximately $3,982, it’s important to set aside funds for travel in the yearly budget. Off-season trips—one benefit of being retired—can cost less, while big-deal exotic vacations can cost way more.

Important

You may have hefty retirement expenses such as medical expenses or retrofitting your house so you can ‘age in place,” but don’t overlook planning for recreational expenditures that can improve your retirement experience, such as travel and picking up new hobbies.

2. Recreational Vehicle

For some, retirement means buying a full-sized or mini motorhome and taking to the open road. How much you’ll pay for a motorized RV depends on the type and age of the vehicle.

According to the RV Industry Association, a Class A motorhome can cost from $100,000 to $140,000. Camper Vans, also known as Class B, cost between $95,000 and $135,000, and Class C motorhomes range from $80,000 to $120,000. Customizations can increase the cost even more.

Buy any of these second-hand, and the cost can drop at least 20% even if it still is relatively new.

3. Vacation Home

For those who have already traveled the world—or have no desire to do so—retirement often becomes a time to move to their favorite destination on a semi-permanent basis.

Owning a second home can cost about as much as owning a first home unless it is in a less expensive community. Other variables include the type of dwelling, its location, and whether it is occupied all year long or just part of the year.

In 2022 (latest information), a vacation home was worth approximately $465,000. Demand for vacation homes has come down significantly since the pandemic.

A less costly option than a traditional house or condominium is a mobile or manufactured home in a mobile home park near a beach or other vacation-friendly location. According to the U.S. Census Bureau, a manufactured home cost about $120,000 in 2023.

These are factory-made and transported to the housing site. Be aware that when you buy a manufactured home that is already on a site, the homeowner may not own the property on which the house sits.

An even less expensive option—and much smaller—is a “park model” trailer. These are one-bedroom RVs with about 400 square feet of living space, designed for long-term or permanent placement at a campground or mobile-home park.

Unless you own the land where it will be sited, remember to factor in rental costs and fees for the campground or mobile-home park when budgeting for a manufactured house or trailer home.

4. Hobbies

For many retirees, retirement means the chance to participate more fully in previously part-time hobbies. Among popular hobbies for people over age 65 are boating, golf, fishing, antiquing, photography, model-building, gardening, volunteering, genealogy, and knitting.

Some hobbies are less expensive than others depending on the tools and gear needed for the activity. For example, a new digital camera purchased online could cost you around $500, but a small fishing boat could be $25,000 or more.

What Is a Realistic Retirement Travel Budget?

The amount you budget for travel in retirement will depend on your retirement income and where (and how) you’d like to travel. Budgeting between $10,000 and $50,000 for retirement travel annually is one way to estimate your costs.

What’s the Average Retiree Expenditure Per Month?

According to U.S. Bureau of Labor Statistics data retrieved by the Federal Reserve Bank of St. Louis, the average annual expenditure of people over age 65 was $57,818 in 2022 (latest information). That works out to $4,818 per month.

How Much Money Do I Need to Retire and Be Able to Travel?

The best way to make sure you have enough to travel in retirement is to build it into your estimations. One rule of thumb is to make sure you save 10 times your annual income before age 67. Adding an extra 6% or so for a more active lifestyle can help ensure you have enough to travel.

The Bottom Line

The most important thing retirees need to do, especially when contemplating a large retirement purchase or investment, is to make sure it fits into their budget. For those who are not yet retired, planning for those big expenditures can make sure they happen when the time comes.

Read the original article on Investopedia.