Retirees, Don’t Let Inflation Cut into Your Summer Plans

If you’re on a fixed income, pricier travel means compromises, but you can still do fun stuff while saving. Think National Parks passes and senior discounts.

An older couple laugh while paddling a small boat on a lake.
(Image credit: Getty Images)

Tell me if this sounds familiar: You’re making your first summer vacation plans in what seems like forever, checking dates with family and rushing to secure your flights and accommodations. Suddenly, you realize this vacation is going to cost you more than you’ve ever paid before!

No, it’s not your imagination. From airfare to hotels to car rentals, the cost of virtually everything is up over the last three years. Inflation — a problem in many areas of life — is particularly high in travel, thanks to post-pandemic pent-up demand. 

According to the NerdWallet Travel Price Index, the overall cost of travel is up 18% from pre-pandemic levels. People just want to get out and see the world. And the U.S. State Department says that this summer is expected to be the busiest on record for international travel by Americans.

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My family and I are feeling the pain, too. One of our favorite summer traditions is to pack up the kids in our motor home, pick a direction and drive. We find campgrounds to stop at along the way. Before the pandemic, we were paying $15 or $20 a night. This year, campgrounds are going for twice that amount — some of the private locations can even set us back $80 or $100 a night, which kind of defeats the point of camping.

For retirees living on a fixed income, costs play an even bigger role in determining what kind of summer plans they can enjoy. Despite travel inflation, it’s still possible to have a fantastic summer. But you may need to make a few compromises.

For retirees, a double whammy

If you’re living on a fixed income, inflation eats into your purchasing power, so your money doesn’t go as far as it used to. But that’s not the only thing that retirees must contend with. There’s also the stock market decline of the past year and a half. Since reaching its high in January 2022, the S&P 500 is down about 8%. That means retirees have less money now than they did a year ago, while costs are higher, making for a dangerous combination.

If you are at the beginning of your retirement, you need to look carefully at your withdrawals in a down market because timing matters. Timing — also known as sequence of returns in financial planning speak — affects not just your immediate portfolio, but how much money you’ll have throughout your retirement.

Here’s why. When you dip into your portfolio as its value is falling, you have to sell more shares to generate the same amount of cash than you would if the market were up. By doing that, you drain your savings faster and then wind up with fewer assets with which to generate returns during a recovery.

And when prices for the things you want to buy are higher, you need even more cash. If you continue spending as usual, you could run out of money much sooner than someone who experiences a down market later on in their retirement.

The good news is it can be managed. But you have to prepare.

Factor in your retirement savings when vacation planning

It should come as no surprise that travel tops the list for how people want to spend their time in retirement. According to the Transamerica Center for Retirement Studies, 70% of U.S. workers say that travel is their top retirement goal.

But given the realities of the market and inflation, travel budgets are looking significantly skimpier this year. Your summer travel plans may need a reboot. Try these ideas.

Accept that 2023 will be different

Start by acknowledging that you may need to put your biggest vacation dreams on hold. Maybe you fantasized about taking your children and their families to Disney this year. But given the new economic realities, that may not be the most prudent financial move right now.

That doesn’t mean it’s completely off the table. At some point, markets — and your portfolio — will recover, and you’ll have more money to work with. How do I know this? Because that’s what always happens after a downturn. Eventually, markets rebound to their previous levels and beyond. (To read more about this topic, see the article Nervous About the Markets and Economy? Consider History.) Hold off on those vacation fantasies for now. Until then, protect your portfolio by paring down your expenses.

Make easy swaps for summer fun

Once you acknowledge that summer 2023 won’t be the blow-out you envisioned, start looking for creative ways to save.

Instead of a luxury resort, maybe a seasonal membership at a nearby water park will be where you spend your afternoons with the grandkids. Rather than hiking the Himalayas, get an $80 National Parks pass and get up close to America’s majesty. Put a hold on your Disney vacation and instead see how many funnel cakes you can eat at the county fairs in your area.

For people who have their hearts set on getting on a plane and traveling abroad, there are savings to be had if you make a few compromises. Traveling to Europe in the summer is costly. But waiting until fall can significantly lower the price. On the other hand, travel to South America, where it’s now winter, is cheaper during the Northern hemisphere’s summer.

Want to take a cruise? Try a repositioning cruise, which happens at the end of the season when cruise ships get moved from one port to another. These cruises can be long, sometimes sailing across the Atlantic to Europe or through the Panama Canal. And they’re only one way. But they’re cheap, costing about half what a cruise typically costs.

Another way to make travel more affordable is to do a home swap. There are a number of websites that allow you to post your home and search for people who want to do the same. Not only will you save on the price of accommodations, but you’ll also get local tips from homeowners. Or think about renting out a room in your house to travelers and set the money aside in a travel fund to offset the costs you encounter.

Don’t forget the discounts

Seniors are entitled to a number of discounts, such as for hotels, flights and trains. Just remember to read the fine print and be prepared to show proof of age. Here are some notable discounts:

  •  Best Western: Those 55 and older can get a 15% discount when booking a room.
  •  Marriott: Seniors 62 and older can snag a discount rate.
  •  British Airways: AARP members can get up to $200 off round-trip flights.
  •  United Airlines: Passengers who are 65 and older can get discounts for some flights. Make sure to check with the airline.
  •  Amtrak: Passengers 65 and older can get 10% off.

You’ll get back to the travel you love

The compromises you make this year aren’t forever, and they’ll help to preserve your purchasing power for later on in retirement. When markets recover and withdrawals no longer make such a big dent in your savings, that’s the time to take the vacation you’ve been dreaming about.

As for me and my family, we’ll have to do a bit more planning this year as we map out our road trip. That means a bit less flexibility because we want to snag the cheapest sites early on. And we’ll have to forgo some of the nicest, best-appointed sites. But what I won’t skimp on — and neither should you — is creating memories with my family no matter where this summer finds us.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Erin Wood, CFP®, CRPC®, FBSⓇ
Senior Vice President, Financial Planning, Carson Group

Erin Wood is the Senior Vice President of Financial Planning at Carson Group, where she develops strategies to help families achieve their financial goals. She holds Certified Financial Planner, Chartered Retirement Planning Counselor and Certified Financial Behavior Specialist designations.