What Will Travel Look Like in 2021?

A pay telescope with New York City in the Background

Some experts believe there will be a slow recovery as newly-vaccinated travelers cautiously test the waters. I think this outlook is wrong – it’s too conservative if the early signs of recovery gain momentum.

Wanderlust is building, and I’m feeling it myself. I know I’m tired of staring at the same four walls of my home, with an occasional trip to the grocery store or a restaurant to pick up food.  Armed with a vaccine, I will travel. I’m not alone.

How do I know others are dreaming of a return to travel? 90% of participants in the Generali Global Assistance Holiday/2021 Travel Sentiment Survey indicated they’d be traveling for leisure in 2021.

Answering a survey is one thing, but taking action, like booking a cruise, is another. In September, Carnival, one of the world’s largest cruise lines, announced 2021 second-half bookings were at “…the higher end of the historical range…”.

So how do you prepare for travel in 2021, keeping in mind it could rebound quickly? The first question is…

Are you comfortable traveling?

Your comfort level with traveling is going to be fluid this year. It will change depending on whether you’ve received a vaccine or not and the overall number of COVID-19 cases in your area.

There is no right answer when it comes to comfort level, and it may be even more complicated when making plans with family and friends as there may be varying levels.

Decisions you will have to make include how to get to your destination? Are you comfortable flying in a small, metal tube packed with hundreds of strangers? Or do you prefer the family sedan packed with your hygienically-challenged teenagers?

Road Trip - Feet out the window

Where will you stay? An Airbnb can offer a contactless experience, where you won’t have to interact with employees or other guests. Some hotels and motels provide this option as well.

Are you comfortable with riding up twenty floors in an elevator with other guests? You can try to catch only empty elevators, but there are no guarantees. Or would you be more comfortable in a motel with direct outdoor access?

Other factors to consider are cleanliness, price, and amenities that may, or may not, be available. 

How do you feel about being near large groups of people? A trip to the city will put you in close contact with others, whereas you might not see another soul if you vacation in the country.  

Stay informed

Even as the pandemic lessens, there will be areas where it may not be contained. Gauge the safety of any destination and make sure there are no restrictions in place for visitors.

If you’re traveling internationally, many countries will demand proof you’ve been vaccinated, make quarantines mandatory, and test you on arrival. Make sure you’re aware of the current procedures in place, and then double-check them. An internationally accepted proof of vaccination has not been approved, so make sure you have proof that is acceptable to the countries you plan to visit.

Put together a detailed itinerary and make sure the places you want to visit are open and operating hours fit your schedule.

Where do you find all of this information? I’ve put together a resource that is a good starting point, and you can find it here:  Coronavirus Travel Advice – a Resource Guide.

Book early, but book wisely

If my prediction of a strong travel rebound is accurate, you’ll want to book as early as possible. Supply will overwhelm demand at some point, and prices are going to rise dramatically. However, this is with the caveat of making sure everything is refundable or covered by insurance through a credit card or separate policy.

Consider using miles to book your trip. Purchases of airfare and hotels using miles are generally refundable but check the fine print. Another reason to use miles is the travel industry is struggling, and these miles may be devalued.

Budget

Has your spending dropped during the pandemic? Travel, dining out, festivals, sporting events, movies in theatres – have all been reduced dramatically in my life.

Did someone say travel fund? Yes. That was me. It’s time to earmark some of your savings for a vacation if you were not harmed financially during the pandemic.

I realize many people lost their jobs, and a vacation is the last thing on their minds, regardless of how much spending dropped. It still makes sense to start planning, even if the date is in the distant future.

The simple act of planning a vacation can make you feel better. And who doesn’t want that right now?

Photos, glassess and a book spread across a map - planning

Putting together a detailed itinerary and budgeting for your future vacation will not only make you feel good, but you’ll be financially prepared. While you’re at it, consider tucking a little away into a tax-advantaged retirement account. (The retirement advisor in me couldn’t resist.)

Do I need travel insurance?

When you start to book your next trip, there will be a strong desire to buy travel insurance. The coronavirus will weigh heavily on the decision. However, before you load up on insurance you might not need, ask yourself if it makes sense in your situation.

Only buy insurance on non-refundable expenses. Check to see if big-ticket items like airfare and hotel are refundable and under what conditions. Will you get cash back or a voucher to use another time? Under what circumstances can you receive a refund?

Read your credit card guide to benefits, or call customer service to see if you might be offered coverage. Credit cards targeted at frequent travelers often will cover parts of your trip.

Your homeowner’s, auto, and renter’s insurance will also provide coverage in certain situations. Check your policies as they may cover your belongings while traveling

There’s a big difference between losing some money and risking your health. Make sure you are covered for medical emergencies and medical evacuations above all else.

After you determine what portions of your trip are already covered, calculate possible losses. You may find out the total you are liable for is minimal. Would you be comfortable losing this amount, and can you sleep at night without insurance? If the answer is yes to both of these questions, you should be able to skip travel insurance.

For a more in-depth discussion on travel insurance and whether you need it, you can refer to my article: Do I Need Travel Insurance?

Too soon?

I debated whether it was a good time to write this article. Too soon? However, I firmly believe we will be traveling again in 2021. I could be wrong, but sometimes it pays to be an optimist when planning for the future. Remember to stay informed, book early, budget wisely, and use travel insurance only when needed. Safe travels!


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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    Adios 2020 – 5 Lessons, Best Travel Photos of the Year, and a Rollercoaster on a Cruise Ship? – Links

    Path bridge snow

    It’s the end of 2020, not what I was expecting when I rang in the New Year. My way of life changed dramatically for the worst in some ways, as traveling came to a halt and I grew a terrible beard. However, financially I’ve never looked better as the stock market soared and my spending dropped drastically. (It’s amazing how good your budget can look when you don’t go anywhere.) Unchanged, was my business, which didn’t miss a beat as I can work from anywhere with little adjustment. I realize this isn’t possible for everyone, and I feel very fortunate. Lastly, and most importantly, my health and that of my family is good.

    I’d prefer 2021 to be a bit more festive. I’m looking forward to some second-half of the year travel assuming vaccines go as planned. I have some canceled vacations I’d like to bring back to life and some family members I’d like to hug. That’s enough of my rambling…

    I hope everyone has a very happy New Year! 


    Retirement

    If you’re not following me on LinkedIn, now’s your chance! I’ve put together some new content and my intentions are to post daily (if I can keep it up) about planning for retirement and travel. I’ll attempt some humor along the way to try and keep it from being stuffy and just another financial planning lecture. Here’s my profile where you can connect. 

    5 Things We Learned About Retirement Planning and Travel in 2020 – (PBF)

    The old saying goes – “No sailor learned anything in calm seas.” Given 2020 was the equivalent of a hurricane, here are the most important lessons of the year.


    Travel

    Comprehensive article on how 2021 might look in terms of travel – (NY Times)

    The article goes in-depth into international travel, spending time on a cruise ship, traveling with children, business trips, and more. It will make you think about all the possible issues that might arise. It’s much more complex than get a vaccine – jump on a plane to Europe.

    Best travel photos of 2020 – (Worlds Nomads)

    Dreaming of travel in 2021? These travel photos of 2020 will get you in the right frame of mind.

    The newest cruise ship from Carnival – (Bloomberg)

    It may be a while, but at 1.5 times the size of Carnival’s next largest ship, it will be worth the wait. My guess is the Mardi Gras will be filled and collecting premium prices from cruisers within a year or two. Honestly, how do you pass up the chance to ride a roller coaster on the top of a cruise ship?


    Your questions about planning for retirement and travel answered. Where to go? What to do? How to plan it? How to afford it?

    You’ll not only be signed up for my newsletter, but you’ll also get a PDF that shows you exactly what a comprehensive retirement plan for people who love to travel is all about. Thanks for reading!

     

     
     
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    Financial Advisor David Tuzzolino

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    5 Things We Learned About Retirement Planning and Travel in 2020

    A Shopping Cart filled with toilet paper

    2020 is almost over. It seems like a bigger than normal celebration is in order, but ironically, the usual New Year’s festivities will be muted. Lockdown orders and an unwillingness to gather in crowds will do that.

    You can’t live through such a unique year without learning something. Maybe it was how to make a mask with an old t-shirt and duct tape, or perhaps it was how to time deliveries at your local supermarket so you could hoard Clorox Wipes.

    What have I learned? I’m glad you asked.

    Do it now

    “The future is promised to no one.”

    A great quote that either came from the Bible, Clint Eastwood, or Walter Payton – Google seems confused. Regardless, 2020 reinforced this concept with the subtlety of a tire iron to the knee.

    Globally there have been 1.6 million poor souls that have died from COVID-19 – a tragic number that continues to climb and a stark reminder that tomorrow is not guaranteed.

    So, do it now. Whatever you’ve been putting off, do it now. Of course, now doesn’t necessarily mean this instant. Do it as soon as it’s reasonably safe. Time with loved ones, long-delayed retirement planning, bucket-list travel – whatever you’ve been putting off. If it’s important to you, 2020 should be that gentle forceful push to get you moving.

    A large elephant nudges a baby elephant from behind

    Don’t try to time the market

    Sure, it’s easy. Sell high and buy low.

    When you’re unemotionally scanning a long-term chart of the S&P 500 in your pajamas, with hot cocoa by your side, the 2020 market drop seems like a tiny blip. Living through it was quite different. With a pandemic raging in the world and global stock markets plunging, opening a newspaper (or news website of your choice) delivered headlines like this:

    Coronavirus Rescue Package Fails to Clear Hurdle in Senate

    IOC Considers Postponing Tokyo Olympic Games

    Coronavirus Hits U.S. Senate as Rand Paul Tests Positive

    Marriott, Hotel Owners Furlough Thousands of Workers, Cut Staff

    And my favorite :

    The Great Toilet Paper Scare

    These articles appeared in the March 22nd edition of The Wall Street Journal – the day before the S&P 500 bottomed.

    Successfully timing the 2020 market involved two trades – selling before the most rapid bear market in history and buying before the fastest recovery. I’m sure everyone has an uncle who brags about how they nailed it to the day, but for most, coming out ahead navigating this market was extremely difficult.

    How hard is market timing? The September 2007 article “Mutual Fund Flows and Investor Returns: An Empirical Examination of Fund Investor Timing Ability” measured mutual fund investors’ performance from 1991-2004. Investor timing decisions caused them to average returns that were 1.56% lower each year than they could have been. Compounded over a lifetime, this is a crippling blow to an investor’s net worth.

    There is undoubtedly an investment guru who sidestepped the crash nimbly and then bought aggressively at the bottom. You’ll hear all about their genius. Don’t be impressed until they do it a second time.

    The best course of action? Keep diligently adding to your retirement accounts. You’ll buy more at lower prices, and your nest egg will thank you. Buy and hold investing works.

    The emergency fund became sexy

    For most people, the emergency fund is boring. It’s a pile of cash in a high-yielding account (try to control your laughter, these used to exist) that sits there unloved. That’s until a once-in-a-generation pandemic sweeps the globe and leaves financial destruction in its wake.

    Financial planning 101 – save 3-6 months of expenses for a rainy day. And every so often, a torrential downpour like 2020 comes along to make you happy you did. 

    Woman stands in pouring rain with umbrella

    If you made it through the year with your job, you were one of the lucky ones. Nearly 16 million Americans were not so fortunate.

    I’ve written many times that the emergency fund is not sexy, but it’s critical when you need it. It can reduce stress and give you extra time to weigh your options when an emergency strikes.

    Retirement may come earlier than you think

    “First time in nearly 50 years people 55 and over have lost jobs at a higher rate than younger peers” – AARP

    Unemployment has hit older workers hard during a time in their lives traditionally used to shore up retirement savings. These high-income years, paired with the ability to make catch-up contributions, are often instrumental to the financial success of a retirement plan.

    Whether it’s companies trying to cull well-compensated employees, or other forms of ageism, this development is unsettling. It may become the normal course of action when future economic shocks hit the economy.

    Even in good times, older workers often leave the workplace earlier than planned. Issues such as health or caring for loved ones can cut short a career.

    The pandemic is a harsh reminder that plans don’t always go as expected.

    The best way to prepare for the unexpected is to develop a retirement plan early and fund it aggressively. If you’d like to retire the day you reach 65, put together a plan that shaves a few years off that number. It’s better to save as if you’re going to retire a few years sooner than desired because early retirement may come whether you want it to or not.

    Another benefit of conservatively preparing for a premature exit is your employer may offer an early retirement package. You will be in a better position to accept an attractive offer. Also, early retirement packages can precede layoffs, so it’s nice to have options.

    Prepare for the future

    A good plan is most valuable when the world around you is falling apart. How did 2020 treat your plan?

    If it’s important to you, plan for it. Put together a budget for expenses, review your insurance policies, make sure your beneficiaries are up to date, and your will remains true to your wishes. It’s too late to come up with a well-conceived plan when you’re in the middle of a crisis.

    If you love to travel, now’s the time to plan your future adventures. Figure out where you want to go, what you want to do, and when you want to do it. Sure, you’ve always had the dream of an African safari sometime later in life, but now’s the time to put a date on it.

    Safari at Sunset

    If you’re not doing it already, include travel in your retirement budget. Most people want to travel when they are done working, but most don’t budget for it. (Financial advisor hint: It can be expensive.)

    Not to make this into a commercial, but now’s the time to put together a comprehensive financial plan. If you have the time, knowledge, and desire to do it yourself, I highly encourage you to go for it. If you need help, find a fee-only financial advisor who will help you with it.

    Conclusion

    The pandemic we are living through is miserable in so many ways. However, the worst thing to do is not learn from it. The last nine months have been a painful time for many, but the experience may ultimately help us all make better decisions and lead a more rewarding life.


    Your questions about planning for retirement and travel answered. Where to go? What to do? How to plan it? How to afford it?

    You’ll not only be signed up for my newsletter, but you’ll also get a PDF that shows you exactly what a comprehensive retirement plan for people who love to travel is all about. Thanks for reading!

     

     
     
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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    A First-Hand Account of Quarantining Caribbean Island Style, 7 Ways to Find Free Money, and More! – Links

    A stone Path Bridge in Central Park covered in snow

    If you find yourself with some free time this holiday season, there’s no better way to spend it than looking for some “Sidewalk Money”. Meb Faber walks you through seven ways you might be able to find some serious coin. While not as lucrative, I’ve included an additional half dozen articles that should be worth your time. I won’t be back with more links until after Christmas, so if you’re celebrating…Merry Christmas!


    New Graduates

    7 Financial Tips for College Grads in 2020 – (PBF)

    It’s the time of year for newly-minted college graduates. If you have one in your life, they may be wondering where to begin financially. Here’s an article highlighting seven tips that will benefit all graduates.


    Retirement

    Instead of drinking a fourth glass of egg nog this holiday season, consider spending an hour or two searching for “Sidewalk Money” – (Meb Faber)

    Meb presents 7 ways to find “free money”. Most take 15 minutes or less. What have you got to lose? I’ll tell you what you’ve got to lose – nothing!

    The pandemic is another reason to expect an earlier “retirement” then planned – (Forbes)

    Putting together a comprehensive financial plan with a retirement plan of 65 sounds like a fantastic idea. But what happens when a pandemic, ageism, or health issues smack you in the face and retirement comes sooner than expected? When planning it’s always a good idea to move your expected retirement age forward a few years to account for unpleasant surprises. It also puts you in a position to accept a generous early retirement package if it comes along.

    Lessons learned from three years of retirement – (CanIRetireYet?)

    “You won’t do it in retirement if you’re not doing it now.”


    Travel

    Want to quarantine on a Caribbean island? – (CondeNastTraveler)

    Here’s how to do it in a resort on the island of Grenada, at a hotel which…refers to quarantining there as “vacationing in place.” A hotel room in paradise is a fantastic place to quarantine – until it isn’t. 

    Trips you may want to book a year in advance – (ThePointsGuy)

    Safaris, French Polynesia, a cruise to Antarctica…all vacations you should consider planning a year in advance. My guess is that bucket-list travel will be in high demand once it is safe to travel again. You might want to prepare in advance, just make sure everything is fully refundable.


    Podcasts

    Top podcasts of 2020 compiled by The Idea Farm– (Spotify)

    If you’ve got some holiday downtime and you enjoy listening to podcasts about markets, investing, and general business ideas – this is the list for you!


    Your questions about planning for retirement and travel answered. Where to go? What to do? How to plan it? How to afford it?

    You’ll not only be signed up for my newsletter, but you’ll also get a PDF that shows you exactly what a comprehensive retirement plan for people who love to travel is all about. Thanks for reading!

     

     
     
  • *Privacy policy: your email address is safe, and you will never receive SPAM.

     

    Financial Advisor David Tuzzolino

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    7 Financial Tips for College Grads in 2020

    Confetti fills the air over a group of college graduates

    Fall graduation is near, and although this year it will be different in many ways, the importance of starting life with a firm set of financial principles is as critical as ever. Earlier this year, I was lucky enough to work with Jared Defaria, an economics student at Johns Hopkins University. I asked him to put together a list of financial tips for college graduates, and he did a fantastic job of writing the article below. (Please ignore the “by David Tuzzolino” that appears above as I spent a half-hour trying to remove my name from the post and was unsuccessful.) Please take a few minutes to read through his work and pass on these financial tips to the new college grads in your life.


    Build a Budget

    Budgeting your expenses is the first step to ensuring that you are meeting all your needs in an affordable way and not wasting any money.  By establishing a monthly budget, you have something concrete to follow. There are dozens of helpful budgeting tools available online, so find one that best suits your needs.

    A cartoon figure analyzes a college grads budgetA college grads budget

    Or, create your own spreadsheet to establish your budget and keep track of your expenses. This will help you avoid eating out too much or forgetting about the 2 or 3 streaming services you’ve been paying for but not using.  Always keep an eye on your budget to prevent these unnecessary payments.

     

    Live Within Your Means

    In order to start building savings, it is necessary to limit unnecessary spending, especially at this stage in your life.  Eating lunches and dinners out and taking trips with your friends seems tempting with your first real paycheck, but it could wreck your budget.  There are also ways to avoid certain expenses that may seem necessary, but you can certainly live without.

    One example of this is a car.  If you can find a way to live near enough to work to avoid spending on a car, your budget will only increase for all your other expenses.  Spending a little extra on housing to achieve this could still be beneficial, but make sure you’re someone who can handle those morning strolls to the office.

     

    Create an Emergency Fund

    It may seem difficult to put money away in case of something completely unforeseen, but an emergency fund couldn’t be more important.  Whether you’re in between jobs, you incur a large medical expense, or a car repair; an emergency fund will give you that extra cushion.

    Live Within Your Means
    A good rule of thumb is to have savings equal to three to six months of expenses to keep you on your feet.  Make sure that you place the money in an account with easy access and a high-interest rate.  There are many options for savings accounts that provide a perfect spot for your emergency fund, and dropping a small piece of your paycheck into that account is all it takes.

     

    Understand Investments and Retirement Plans

    Before you can determine what retirement plan is right for you, it is first necessary to understand what they are and what they provide. Understand the differences between a 401k and Roth IRA, both of which would be sensible retirement plans for a college graduate.

    A 401k is a good option if your employer offers a company match for what you put into the account.  Make sure you know if they do and what the match is. Contribute at least up to your employer’s match to maximize the value of your 401k.

    A Roth IRA provides a great option for recent college grads.  Contributions and earnings from the account can be withdrawn tax-free and without penalty for any reason once the investor reaches age 59 ½ and the account has been open for at least five years.

     

    Quickly Pay Off High-Interest Debt

    As a college graduate, there is a good chance you are left with student loans.  However, most federal student loans for undergraduates have low, fixed interest rates that don’t need to be paid off quickly.  Once you’ve graduated college, you need to focus on paying off all high-interest debt, such as credit card debt, personal loans, and some private student loans. 

    Quickly Pay off High Interest Debt

    Much of this debt can be avoided from the start just by following most of the tips we’re discussing now.  By always paying your credit card bills on time, creating a budget, and building an emergency fund, you can avoid most high-interest debt.  Too much of this debt early on in life can weigh you down.

     

    Establish Good Credit (And Be Smart About It)

    It may seem risky to establish credit this early, but many more opportunities will be available to you in doing so.  With good credit, banks and other lenders will be much more willing to loan you money and at a much better interest rate.

    At this stage, the best way to establish good credit is to start using a credit card (and to always pay your bills on time).  By using your credit card for all regular purchases, like getting coffee or going to the movies, benefits will build up, and your credit score will improve (again, as long as you pay your bills on time).  Most importantly, make sure to still stick to your budget and avoid any impulse buys.

     

    Understand What Insurance You Need

    Insurance is necessary but, for a recent college grad, you can avoid paying hefty premiums for insurance you don’t really need.  For example, life insurance is very important once other people become financially dependent on you, but while you are still independent, you can focus on different types of insurance.

    Health insurance, car insurance, and renter’s/ homeowner’s insurance are all things to consider at this stage in your life. There is a strong chance that your employer will provide health insurance, and that is something to look into when selecting your first job. 

    More often than not, you will be renting a home once you graduate rather than owning one, so the next step to focus on is renter’s insurance.  Many people make the mistake of thinking that they will be covered under their landlord’s insurance; however, you will definitely need your own insurance.  Renter’s insurance is important for any damage you might cause, any injury on the property, and for personal items in case of theft, fire, flood, etc.  Make sure to always know exactly what is covered under your insurance plans.

    If you get kicked off of your parents’ plan, it will be necessary to purchase car insurance.  It’s important to note how to create the most affordable insurance plan, as car insurance can get expensive at this age.  You’ll need to consider what kind of car you’ll have, where you’ll be driving, how much you’ll be driving, and your previous record when considering insurance, as those will all be factors in the cost. 

     

              Written by Jared Defaria


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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    It’s Time to Fortify Your Travel Budget, How to Reduce Your Taxes in Retirement, and Otherworldly Landscapes – Links

    A brick pathbridge over a calm stream

    I’m highlighting the fact that travel will explode in the coming years, and with it, prices are sure to follow. Prepare your travel budget now so you can enjoy a seamless transition from cocooning in your home to exploring the world. 


    Retirement

    Your Travel Budget Is About to Implode – Here’s What to Do About It – (PBF)

    How does your retirement budget look? It might not look as good as you think, given the bottled-up demand for travel that will be unleashed when the pandemic eases.

    Retirees – reduce the tax hit – (CNBC)

    The right strategy in retirement can significantly decrease the taxes you pay.


    Travel

    26 Otherworldly Landscapes to Visit – (Conde Nast Traveller)

    You might not be able to visit anytime soon, but one can dream.

    VRBO Trend Report 2021 – (VRBO)

    An informative report  – this is what families are thinking about for 2021 travel. Hint: 82% of families already have travel plans for 2021. Now that’s pent-up demand!

    Round the world in style – (Luxury Travel Advisor)

    5 continents, 28 countries, 72 destinations. This is exactly what I need to forget 2020.

    Did COVID change travel permanently? – (CNN)

    A vaccine may open up the flood gates to bucket-list travel. New technology and ways of thinking about travel may change the experience for a long time; some things will be better, others not.


    If you’d like to subscribe to my newsletter, you can do so below. You’ll also get a PDF that shows you exactly what a comprehensive retirement plan for travelers looks like. Thanks for reading!

     

     
     
  • *Privacy policy: your email address is safe, and you will never receive SPAM.

     

    Financial Advisor David Tuzzolino

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    Your Travel Budget Is About to Implode – Here’s What to Do About It

    A crying piggy bank is broken open and a travel budget (pennies) lies all around.

    Econ 101

    You remember Econ 101, don’t you? It was that class you took freshman year of college where you sat in an auditorium filled with 500 of your classmates watching a dry professor drone on about widgets while viewing an unending series of graphs. If economics wasn’t your calling in life, you probably forgot most of the material.

    However, if there is one universal lesson that you learned, it’s supply and demand. And this is why your travel budget is about to implode.

    If you’re gearing up for retirement in the next two or three years, it could be incredibly ugly. And even if your ultimate retirement date is far in the future, this economic concept is going to affect your travel plans greatly for the next several years.

    Supply

    COVID-19 has dealt a serious blow to travel infrastructure. Cirium, a travel industry data and analytics company, reports global flight volume is down 54% year over year, and 30% of the worldwide airline fleet is in storage.

    In a September American Hotel & Lodging Association survey, half of the hotel owners stated they were in danger of foreclosure. Popular travel destination and early-pandemic hotspot, New York City, is being especially hard hit. According to the Wall Street Journal, the state of New York could lose 250,000 rooms permanently, which equals about 20% of supply.

    The cruise line industry has been decimated, and nearly all ships are docked.

    Docked, deserted cruise ship

    Industry leader Carnival is reducing its fleet by 18 ships, equivalent to 12% of capacity. It’s uncertain how many of these ships will be purchased and returned to service by other cruise lines and how many will be scrapped. This supply is not coming back anytime soon, either. Carnival has already announced there will be no ship deliveries in 2024 and only one in 2025. After scrambling to keep companies afloat in 2020, it will not be easy for cruise line management teams to jump back into growth mode and order new ships anytime soon. 

    Restaurants are in better shape than many other leisure-related companies given their ability to operate at reduced occupancy and provide delivery, but their struggles are still severe. The National Restaurant Association expects approximately 1 in 6 restaurants in the U.S. to close in 2020. Everyone wants to open a restaurant, right? Will the old adage hold true with 2020 stresses a recent and painful memory?

    This devastation extends to the entire travel industry, and it may continue to get worse as we suffer through a long winter with COVID cases spiking in many places around the world. The good news is several vaccines look promising, and the end might be nearing. But what will remain of the travel industry?

    Demand

    I love to travel, and I miss it tremendously. I find myself reading blogs and watching videos about travel to pass the time while waiting for a vaccine. By the middle of next year, I will be visually vibrating with anticipation. I’m certainly not alone.

    A November survey by Destination Analysts states that 80% of U.S. travelers have tentative trip plans sometime over the next year. And this is before a winter, where the northern part of the country will be in virtual lockdown.

    Globe wearing a surgical mask

    Combine COVID fatigue with an effective vaccine, and you’re going to see an explosion in revenge travel.

    If the pandemic has taught us anything, it’s don’t put off doing the things you love. I think travelers are going to take this to heart in a big way. Not only will they be traveling, but exotic, bucket-list trips will likely move to the front of the line.  

    Cruise lines are already seeing signs of this pent-up demand. In September, Carnival announced that 2021 second-half bookings were at “…the higher end of the historical range…”.

    The exact timing of a travel recovery is uncertain, but it will undoubtedly come when the pandemic is under control. Unfortunately, the COVID-fatigued group of travelers that are finally set free may be in for an unpleasant surprise.  

    Demand Up and Supply Down

    You don’t have to dig out your Econ 101 textbook and a mechanical pencil to figure out what’s going to happen when a flood of travelers descends on a battered leisure industry operating at reduced-capacity. Prices will increase – dramatically.

    Expect to pay more for nearly every component of your vacation. You’ll be competing with other travelers for every flight you book, cruise you schedule, and hotel reservation you make. The days of finding last-minute discounts will be over as soon as safer conditions prevail.

    I don’t see this supply-demand dynamic reverting to normal for years. Sure, new restaurants can be opened in a relatively short amount of time, but will there be a long line of entrepreneurs willing to take the risk after witnessing the COVID carnage?

    Airlines and cruise lines can not turn on a dime. Wikipedia lists over 30 airlines that have entered bankruptcy in 2020. Some of these companies will restructure, but others will cease operations. Airlines that continue to fly are putting planes into storage and may find it uneconomical to return the aircraft to service. Building new planes can take only a few weeks, but the industry backlog could grow rapidly with an increase in demand. Building a new ship can take years, and larger vessels cost over a billion dollars.

    The crush of travelers released from COVID hell will run full speed into a reeling travel industry. Prices will spike. It may take some time for these companies to heal, and a rush to increase capacity is unlikely. The travel industry will enjoy robust pricing (deservedly so given their recent pain), and your vacations will cost more. There will come a time when entrepreneurs increase capacity to meet this high-margin demand, but gun-shy business owners may be slow to react.

    Solution

    It’s time to take a hard look at your travel budget. Does it still make sense? Will you be able to afford the elevated prices that could last two to three years? If you’re like me and refuse to give up your travel dreams, here’s what you need to do.

    Save more money. It’s time to start funneling more money into your travel budget. If you’ve been fortunate enough to keep your job and are working from home, you’ve likely decreased spending on dining out, commuting, entertainment, etc. Earmark at least some of your savings for travel, and you’ll be prepared for higher prices.

    Money being placed in a pink piggy bank

    Consider less-popular destinations. Resist the temptation to join the masses at tourist hotspots. Sure, you might want to show off your newly-gained immunity by mingling with large crowds, but your travel budget will suffer. Less-touristy destinations will allow your dollar to go further.

    Book your travel far in advance. Many businesses are offering fully refundable options. Take advantage of these and book your trip early. Prices should be lower this winter, given an uncertain future. Even if you’re unsure of the timeline for a vaccine and a return to safe travel, feel free to book a vacation as long as you’re guaranteed a full refund if you need to cancel. Make sure to read the fine print so that you completely understand the cancellation policy.

    Summary

    Studies have shown that the simple act of planning a trip can lift your spirits. So, don’t let the current pandemic stop you from dreaming about your future travels. Be proactive. Consider less-trendy destinations and increase your savings to fortify your travel budget against a more expensive travel-future. If you prepare now, when things clear, your biggest decision will be where to go on vacation, not how to afford it.

    Need some inspiration? Intrepid Travel has put together a wonderful list of 9 mind-blowing travel videos. Enjoy!


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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    10 Amazing Retirement Locations, My Podcast Debut, and Living the Hallmark Christmas Movie Experience – Links

    Leaf covered path bridge

    My mind is definitely wandering toward travel if these links are any indication. I think it’s the knowledge that winter is upon us up north and I will be seeing way more of the inside of my home. This dread coupled with the promise of a vaccine before too long has me thinking about the next trip. What I’ve been reading:


    Retirement

    Find out where you measure up when it comes to 401k savings – (U.S. News & World Report)

    If you reach $1 million in your 401k by the time you retire, you’ll be ahead of the pack by many multiples. Start saving aggressively, and increase the amount every year. If you can meet the 401k max, you’ll be in good shape.

     

    The top 10 countries to retire in – (Business Insider)

    Have you ever dreamed about retiring overseas? It’s never too early to start scoping out potential locations.


    Investments

    I had the privilege of joining Kyle Hill, CFP®, on his podcast – Personal Finance from the Hill-Top. We talk about the basics of stocks, bonds, diversification, and more.


    Travel

    It’s going to be a long winter – embrace it! – (The Washington Post)

    “Friluftsliv…translates to open-air living and exemplifies the tradition of making time outdoors part of daily life — whatever the season.” Take it from the Norwegians, because they know how to do cold. When you get tired of the indoors this winter, make the outdoors your friend.

    19 hotels you’ll want to book just for the bathtub – (The Points Guy)

    I haven’t take a bath in 40 years. Yes, I said it! I’m solidly in the shower camp, but I could change my mind if I had these views.

    Towns to visit in Pennsylvania if you want to feel as if you’ve been dropped into a Hallmark Christmas Movie – (Travel Awaits)

    This might not be the best year for a Hallmark Christmas Movie experience, but save this link somewhere special, and when travel conditions improve, you’ll have a Christmas destination mapped out.


    If you’d like to subscribe to my newsletter, you can do so below. You’ll also get a PDF that shows you exactly what a comprehensive retirement plan for travelers looks like. Thanks for reading!

     

     
     
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    Financial Advisor David Tuzzolino

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    146 Minutes of Fame

    Personal Finance

    Some people get 15 minutes of fame, I got 146 of them! It was my pleasure to join Kyle Hill, CFP® on his podcast – Personal Finance from the Hill-Top. 

    I put on my CFA cap and we walk through the basics of stocks, bonds, diversification, and more. You even get to hear me try to pronounce foliage.

    Click on the link below to listen!

    Personal Finance from the Hill-Top Episode #6 – Diving a Layer Deeper into Investments


    Enjoy what you just read? If so, you can subscribe to my newsletter below. You’ll also receive a PDF that shows you exactly what a comprehensive retirement plan for travelers looks like. Thanks for reading!

     

     
     
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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    How Much Do You Need to Retire (and Travel), What Makes You Happy in Retirement, and Soup – Links

    Path bridge through the woods with leaves turning colors

    Now that Halloween and Election Day have passed, is it too early to put up the Christmas tree? The old stand-by of waiting until Thanksgiving is over doesn’t seem to make sense in 2020. 

    The most common question I hear from people who reach out to my firm is – “How much do I need to retire?” I walk you through the process for do-it-yourselfers who want a quick answer. Also included below, the best of what I’ve been reading on retirement, travel, and, yes, soup. 


    Retirement

    How Much Do I Need to Retire (and Travel Like Royalty)? – (PBF)

    I walk you through a quick-and-dirty way of coming up with your number, using readily available online retirement calculators. If you’ve ever asked yourself – “How much do I need to retire?”, this is the article for you. If you enjoy traveling, I also discuss why it’s crucial to incorporate travel expenses into your budget before and after retirement.

    Over 55? Your retirement is more uncertain than ever before – (Forbes)

    It’s a warm and fuzzy feeling when you have a well-developed comprehensive financial plan. That is until your age 65 retirement suddenly, and without your consent, is forced upon you a decade early. Moral: always plan for retirement conservatively, erring on the side of an earlier than expected retirement. You may not have to retire at 55, but it’s nice to be prepared if it’s forced upon you.

    What makes you happy in retirement according to financial advisors? – (U.S. News & World Report)

    No earth-shattering surprises here, but a good reminder that it’s a mix of financial and social factors that will make you happy in retirement. If you ignore either side, your happiness will likely suffer.


    Travel

    Holiday Travel Report – (ThePointsGuy)

    Are you traveling for the holidays? Mix a little Mad Max with ER. Ok, it’s probably not going to be that bad, but I have to imagine stress will be elevated even more than usual, and everyone will be concerned about health.

    Financial Independence / Abbreviated Retirement – (New York Pilot)

    Think mini-retirement coupled with life-changing adventure. I believe we’re going to see a huge spike in this once the coronavirus is under control. We are all learning the valuable lesson of not waiting to do things you love. Do it now; you might not have a second chance.


    Soup

    26 soup ideas for the upcoming winter from around the world – (MSN)

    It’s that time of year! Are you ready to get your soup on! If you’re looking for ideas, here are 26 recipes to keep you warm.


    If you’d like to subscribe to my newsletter, you can do so below. You’ll also get a PDF that shows you exactly what a comprehensive retirement plan for travelers looks like. Thanks for reading!

     

     
     
  • *Privacy policy: your email address is safe, and you will never receive SPAM.

     

    Financial Advisor David Tuzzolino

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.