Cheap and Easy Travel via RV

When I ask people what do they plan to do when retired, the answer often is: “See new places.” A good and affordable way to do that is becoming a part-time or full-time RVer.

In my experience, the No. 1 activity most people look forward to when they retire from earning an income is travel. Seeing the world has never been easier. True, air travel is rarely easy or pleasurable, and it can be expensive. With a little planning and work, though, travel can fit easily into many retirees’ budgets.

While to me driving around the country in a motorhome or hauling a camper sounds like a lot of work, it’s very pleasurable for a lot of folks. With your own recreational vehicle, there are no security lines, tour schedules to keep or nights spent stranded in airports. You may not go fast, but you get to go where you want, when you want.

RVing doesn’t mean you need to buy a motorhome as long or as pricy as a semi-trailer truck. It can be as simple as pulling a small camper or trailer. While you need a heavier gas-guzzling vehicle than a Toyota Avalon to pull your rig, the costs can be significantly lower than staying in motels.

This is the case even when you consider expenses like auto insurance, depreciation, tires, maintenance and camping fees. You can even minimize the camping fees as long as you’re okay with a view of the local Walmart’s parking lot.

Judging from retirees I know, RVing can become a lifestyle very quickly. RVers develop networks and associations with other RVers to share experiences, costs and information. Some of my clients enjoy the lifestyle so much they actually sold their homes, preferring the RV as their primary residence.

This is when RVing can take financial efficiency to new levels. By not owning a home, you can take the money previously tied up in a personal asset and make it produce income.

Let’s illustrate with some numbers. It isn’t uncommon for couples in the Black Hills of South Dakota, where I live, who are in their 50s or 60s, to own a paid-for home worth $250,000. That amount, invested in passively managed mutual funds diversified in five or more asset classes, reasonably produced an annualized return of 6% over the past 10, 20 or even 30 years. If you leave half this return to help keep up with inflation and withdraw the other half, you have about $625 a month in new income.

The good news is you don’t need a lot of money to retire to an RV lifestyle. The extra $625 a month from selling a home, combined with Social Security and a modest individual retirement account, can go a long way. I know several RVers who do nicely on such income.

Here’s how it might work for a typical couple. A total amount saved to IRAs of $450,000, plus the proceeds from selling their home for $250,000, produces income of $21,000 a year. Adding this to their combined Social Security income of around $30,000 annually gives them $51,000. That’s more than enough to enjoy modest, but comfortable, RV living.

An added benefit for residents of a state like South Dakota, which has no income tax yet relatively high property taxes, is a lower tax bill.

Just one word of caution: Before you sell your house, make sure full-time RVing is right for you. Take a trial period of at least a year, renting out your home while you travel. Then, once you decide the roving lifestyle is what you want, you can cut your ties to terra firma and set out to enjoy the freedom of the open road.

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Rick Kahler, CFP, is president of Kahler Financial Group in Rapid City, S.D.

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