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We’re all going on a retirement gap year

13 December 2017

WE’RE ALL GOING ON A RETIREMENT GAP YEAR

  • Nearly two out of five plan an extended gap year trip when they are 60-plus
  • Two out of three are banking on savings to fund the £5,000 cost

New research1 from Charter Savings Bank shows older travellers are increasingly leading the way when it comes to gap years.

While traditionally a gap year is something students do on a tight budget after school or university, the bank’s study found two out of five (40%) workers are planning one when they are 60-plus and will fund their trip with savings built up through a lifetime of work. By contrast just one in five (18%) are planning gap years by the time they are 30-years-old.

Estimates2 show that in an average year, over half a million UK adults take a gap year, with older travellers spending around £5,000 on their trip. Around 60% of gap year travellers are students or people who are still working.

Charter Savings Bank research found around half (49%) over-45s have never taken a gap year or extended break from work but intend to take their chance to travel once they are in their 60s or have retired.

The gap year wish list is topped by continental Europe, with the under-25s in particular (48%) choosing it as their preferred destination.

TOP GAP YEAR DESTINATIONS

UK AVERAGE

UNDER-25s

OVER-55s

Europe

27%

48%

25%

Australia/New Zealand

17%

8%

18%

Round the World trip

16%

24%

11%

USA

16%

20%

14%

South East Asia

5%

8%

5%

South America

5%

Zero

4%

India

4%

Zero

4%

Africa

4%

8%

8%

Japan

4%

4%

2%

Source: Charter Savings Bank, September 2017

Would-be gap year travellers will rely on savings to fund their trips, the study shows. Up to two-thirds (63%) say they will take money from their savings accounts for the trip compared with just 7% who will use credit cards.

Younger travellers are slightly less likely to cash in savings – 56% of under-25s will take out cash while 16% will rely on credit cards and one in three (32%) will work during their gap year to raise cash. Only around 9% of over-55s will be working on their gap year.

Paul Whitlock, Director of Savings, Charter Savings Bank says: “Many of us think about gap years being the preserve of backpacking students, but increasingly we’re seeing that older customers are catching the travelling bug.

It’s worth remembering that once-in-a-lifetime opportunities can happen at any time of life, and whilst globe-trotting in your 60s might seem like a long time to wait it does have the advantage of travelling in a little more luxury and not having to run up debts to fund it.

It definitely highlights that a savings habit does pay off, even if the amount you’re able to put aside today seems too small to make a difference.”

The research shows the biggest motivation for a gap year – cited by 25% of those questioned – is the chance for a once-in-a-lifetime experience while 12% see it a chance for a career break and 11% are motivated by a desire to see the world.

The checklist below outlines financial considerations for those planning a gap year in retirement

  • Set a budget before setting off and if necessary see a financial adviser to asses your financial position
  • Make a plan on what to do with your property – renting out your home while you are away will help provide funds but you will need someone to manage the property and will need to review insurance
  • Take out long-term trip travel insurance
  • Move your finances online so you can manage money when you are travelling

On a regional level, those living in the South East are the most likely to plan a year off (14%), followed by those living in the North West (11%) and Yorkshire and Humberside (11%). In comparison, only 4% of those living in Wales are planning to have a gap year.

1 Consumer Intelligence conducted research on behalf of Charter Savings Bank between 20th and 21st September 2017 among a nationally representative sample of 1,029 UK adults aged 18-plus.
2 http://gapadvice.org/

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