Part 1
For as long as there have been far-away horizons, oceans to cross and cities to explore, people have fantasized about traveling the world. In the past, Marco Polo scoured the Orient and Columbus traversed the western world under the billowing-sails of the Niña, Pinta and Santa Maria. These were business trips, ostensibly, but they captured our imagination.
Today travel ranks high on the Long Term To-Do list of much of the western world. The purposes are different: pleasure, learning, relaxation, challenge, social causes, but the result is the same. World travel is now a burgeoning business, exploding as a good part of the ninety million North American baby-boomers and much of the European middle-class rove the earth.
Globalization, relative wealth, new market economies in post-communist countries, technology and telecommunications have changed forever the face of the planet. People seek increasingly remote locations, and trends such as low-cost, no-frills airlines are making travel possible in ways never imagined twenty years ago.
Long-Term Travel Takes Planning
Millions of folks take short two or three week vacations every year. Yes, these trips require planning, but do not disrupt home life. However, if you hanker for an uninterrupted journey or several months off to explore the far reaches of the earth, the architecture of your life must be reconstructed on different footings. Your current accommodations, possessions, medical needs, life and travel insurance, banking, mail, communications will be managed from afar? How to do this? Read on.
Give Yourself Lots of Time
Start planning at least six-months in advance for long trips abroad. Inevitably, some snags will occur. If your systems work well at home before starting your trip you might, just might, have some peace of mind.
House/Possessions
Renting? No problem. Put your possessions in storage and go. Home owners have many options as well; your house can be sold, rented, swapped or house-sat. If you plan extensive trips over a number of years, a lock-and-go condominium might work for you. Leaving your house vacant for more than thirty days may invalidate your insurance. Check.
If your retirement plans include moving, determine if you should sell before you leave or rent it and sell when you return. Calculate investment yields of your capital. For example imagine you have a net $500,000 from the sale of your home. At 5% interest, this would provide $25,000 a year taxable income. If you plunk that in a secure interest-bearing guaranteed income product, your life could be relatively hassle-free.
Now consider your real-estate situation.
If you plan to rent your home, determine gross income and deduct expenses such as insurance, mortgage payments, property taxes, property management fees and other miscellaneous expenses. Calculate your net taxable rental income and compare this with your projected investment returns from placing your money in a conservative financial instrument. However, this is only part of the picture; other calculations are necessary. What comes into play is the future trend of real estate in your specific area.
If you keep your real-estate, you are banking on future growth. This is a bit of the “bird in the hand is worth two in the bush” dilemma. While you know current real estate market prices, future real-estate prices are unknown. Real estate projections are just that, projections. When you eventually sell, market conditions of supply and demand at that time will determine your yield.
Look at current and trending mortgage interest rates. Pay for a market-value home appraisal before you leave. Check with your tax accountant for specific details, as rules do vary from state to state.
Keeping or selling your real estate comes down to your belief in future trends. Realistic market information might help in deciding whether to rent or sell your home. An additional factor is your emotional attachment to your home.
Everyone is different. Do you love your home, or is it just a place to live? Determine your psychological need for a home base. Would you feel wonderful or horrible roaming the world without a home?
Consider your comfort level with situations such as nasty marijuana grow-operations, or, if you just want to move on. Remember, you can buy again when you return. If you rent your home out, hire a property management professional to handle the tenant selection, rent collection, and repairs. Better not be “penny-wise and pound-foolish”.
Storage:
Apparently an average three-bedroom household weighs in around ten-thousand pounds. Storage costs for this are $350.00 to $400.00 per month in my large urban city, excluding insurance, and cartage. This is for containerized indoor-storage. Your possessions are loaded into a container at your residence, locked, moved and stored. These rates were researched in November, 2006. While this may seem expensive, with property taxes, insurance and condominium fees, an empty condominium can easily be $5,000 per year as well. You would need to consider your rental income less storage if you go this route.
Contemplate moving your home base, if you will spend several months or years in an area. For example, if you plan to explore Europe for a year, move to an inexpensive flat in a city with good airline connections and go from there.
Remember, you will not lose your friends. They will be coming to visit you.
More on passports, visas, mail, banking and telecommunications next week. (892 words)
Mahara Sinclaire, M.Ed.
© Mahara Sinclaire, 2010
mahara@laughingboomer.com
Contact Information: The Laughing Boomer Services #8 8623 Granville Street, Vancouver, BC V6P 5A2 Canada
Mahara Sinclaire, M. Ed., the Boomer Expert, is the author of the book The Laughing Boomer, due out in 2011 and the Laughing Boomer Workbook: Retire from Work, Gear up for Living. She has presented hundreds of workshops on a variety of topics, writes syndicated columns and presents workshops on retirement planning. Mahara is known for inspiring clients to move forward with their lives. She can be reached by telephone at 604 210 2025, mahara@laughingboomer.com or www.laughingboomer.com.
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