I’m 62 with $4 million. Should I buy an RV to travel during retirement?

A Reddit user and his wife are both retiring soon. They are 62 and 56, have no debt or kids at home, and have a $4 million net worth plus a paid-off house. They are facing a big question about their retirement, though. The original poster (OP) said his wife wants to see the world, and she wants to do it in a travel trailer. 

Since this would mean also buying a new truck on top of the trailer, the OP said the total costs would be around $100K to $110K. The OP is concerned that it’s crazy to start his retirement off with such a big expense, but is wondering if he should bite the bullet and do it because it would allow him and his wife to live their dream of traveling the country. 

So, should they splurge for the RV or just say no?

Is a big RV purchase the best way to start off retirement?

The OP did not make clear exactly how he would pay for the RV, but did say that half of the couple’s money is in taxable brokerage accounts. Assuming they took $100K out of those accounts to buy the RV, this would reduce the amount they have invested from $4 million to $3.9 million as they get their retirement underway. 

Assuming the couple opts to take money out at a safe withdrawal rate, which experts now say is around 3.7%, a $4 million nest egg would produce $148,000 in annual income while a $3.9 million retirement nest egg would produce $144,300. By reducing their account balance up front, and losing out on all the returns they’d have had if they didn’t take such a large initial withdrawal, the couple would find themselves living on $3,700 less per year during the course of their retirement.

Given that the OP said the couple only needs $120,000 per year to maintain their lifestyle nicely, it may be worth taking this hit to have the RV they want.  Plus, if they are going to travel anyway, doing it in an RV can be a cheaper way to do it than paying for planes and hotels, so they may end up saving more than that over time due to the RV purchase.  They do need to consider things like ongoing maintenance costs, though, and should definitely make sure RV-ing is right for them before they commit to the purchase. 

Talk to a financial advisor before making big retirement moves

While the OP here would most likely be Ok with buying the RV, it is also worth a conversation with a financial advisor to make sure that he doesn’t end up regretting his decision. A financial advisor can help him understand the long-term implications of his choice to buy the RV and can work with him on the best way to fund it. For example, the OP will want to be careful about the impact of selling a lot of stock on his tax bill, and an advisor can help him address this issue and minimize the amount he must pay to the IRS. 

With the right professional advice and an advisor’s sign-off on the purchase, however, the OP should be ready to go and drive off into the sunset as he begins enjoying his retirement with his wife and they start seeing the world.

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