How Your Summer Vacation May Help Your Retirement
By Scott Spann
July 8, 2019
The culture at Financial Finesse, where I help provide workplace financial education and planning, is characterized by our “work hard/play hard” mindset. We also have a robust benefits package as you would expect from the leading provider of financial wellness benefits in the workplace. Even with these incredible perks, I still have somewhat of a confession. During my six-year tenure, I’ve done a horrible job of utilizing valuable employer-provided benefits, including paid time off (PTO), where I’ve reached my limit of accrued days.
I’m not the only hard-working person leaving a few vacation days on the table. According to the Center for Economic and Policy Research, over half of all workers didn’t use all of their vacation days last year. Time off for vacations may not be a requirement, but over 90 percent of full-time workers receive a paid vacation.
The reasons for not taking time off for vacations vary significantly. Many workers claim they are too busy or fear losing their jobs if they take too much time off. Some simply enjoy their work and are too engaged in their careers to take a vacation. Others are struggling financially and as a result, do not believe they can afford to take a vacation.
The underlying question that I ponder goes beyond the “why” behind the underutilization of paid time off. I am curious about how vacations (and in many cases the lack of taking time off) may influence our future satisfaction with life when we achieve financial independence. Whether you are putting off that well-deserved vacation or planning for your next upcoming opportunity to disengage from the workforce, here are some ways you can use your vacation time to improve your sense of financial wellness both today and during your retirement years:
Use your time away from work to recharge. Many workers are leaving money on the table whenever those unused PTO days disappear. Perhaps the biggest risk involves missing out on the opportunity to recharge and reset your mind, body, and soul. Taking a break from the regular routines of work provides an opportunity to refocus and reassess your life plans.
The key to a productive vacation is to make sure that your time off gives you a chance to spend extra time doing the things you enjoy the most with the people you enjoy spending time with. A vacation doesn’t necessarily mean you have to go anywhere or dip into your savings. The main benefit is that you dedicate meaningful time to the people, activities, places, or causes that you are most passionate about.
Plan for retirement with a vacation mindset. On average, we spend more time each year planning for vacations than we actually spend planning for our financial freedom years. This is a disturbing thought considering most vacations last 1-2 weeks at the most and your retirement could last 30 years or more.
Although this fact is disturbing, it makes perfect sense. Vacations are easier to comprehend and tend to be more present-focused. Retirement, on the other hand, seems abstract and far off in the future. We also all have a unique definition of what “retirement” means.
One way to overcome our bias towards the present is to approach the retirement planning process the same way we plan for vacations. After all, retirement is often referred to as a long-term vacation. Vacations provide us with a valuable opportunity to practice retirement albeit within a much smaller window of time.
Stop for a moment and think about your ideal vacation. What are some of the things you enjoy doing the most? Do you prefer traveling or staying close to home? Are you eager to volunteer your time? Your answer to these questions will help you figure out what you look forward to doing the most during retirement.
Prepare for future vacations in advance. If you already have a firm itinerary in place, it’s somewhat hard to undo your current vacation plans. But if you’ve already gone into debt to pay for your vacation (or are headed into the red once you return from that summer trip) then you may be showing signs of a bigger financial problem.
Going forward, work your vacation fund into your spending plan. You cannot borrow money to fund your own retirement so stop going into debt to fund your vacations. If you aren’t willing to grasp the concept of compromise during your summer vacations, it will be really frustrating to embrace the prospects of compromising your retirement goals later in life.
Prioritize the goals that matter the most to you. Taking time away from work is just as important in our 20’s and 30’s as they are in the years leading up to retirement. The last thing you want as retirement nears would be to end up with a mountain of lost opportunities and regrets. Vacation planning done the right way involves a process of aligning your priorities for how you plan on spending your time and treasure. But if you don’t prioritize your need for a vacation in the first place, you may be missing out on some important planning that will help you when you are ready to step away from work permanently.
This article was written by Scott Spann from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.