Retirement can come with tremendous changes in your lifestyle, for better or worse. Retirement might mean more leisure time and freedom from the daily grind, but also a fixed income and a tighter budget.
For healthy retirees seeking the ultimate freedom — and potential savings — retiring on a cruise ship or recreational vehicle (RV) might appeal.
“It’s as much an emotional decision as a financial one,” said Tyler End, CFP, CEO and co-founder of Retirable, a platform for people close to retirement or who have recently retired.
If you’re on the fence about retiring on a cruise ship, RV or taking the traditional route and moving into a senior living community or buying a smaller home, it’s important to weigh all the factors.
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New House or Nomad Living?
Housing prices in many markets are dropping, albeit slowly, according to a recent report from Zillow. More than half of homes (53%) have lost value year over year, according to Zestimates from the real estate website.
But home prices in many markets remain elevated, which can make it harder for retirees to right-size their home affordably. Instead, that money can be spent to invest in a different lifestyle and see the world — or at least the U.S.
“Most retirees selling their home will have a lump sum of money. They are downsizing as they enter this third phase of life,” End pointed out.
So is it better to indulge in several years on a cruise ship or explore the RV life? As with so many financial decisions, the answer depends on many factors.
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All-Inclusive Cruise Line vs. Monthly Costs in an RV
Costs can vary dramatically depending on the size and model of the RV, the type of cruise line and what you do with your time in either case. While cruise lines are often all-inclusive, some excursions may have additional fees. When you retire in an RV, the daily costs of everyday life don’t disappear.
RV Costs
Ultimately, retiring in an RV is likely to cost about the same as it would cost to live in a home, minus your mortgage and property taxes. A luxury RV may sell for about the same as a smaller house in a rural area, so you might have monthly payments unless you buy the vehicle upfront.
For instance, Camping World lists new campers starting at roughly $10,000, which require a truck to tow, as well as motorhomes that sell for $200,000-plus. That’s more than the median home value in some areas in West Virginia and Mississippi, and roughly the same as the average home in Louisiana.
Then there are camping fees and hook-ups to consider. However, RV owners have more flexibility with daily costs than retirees would on a cruise line, where most monthly costs are fixed and included in your trip.
“One of the benefits of RV life is you can decide when to save money versus splurge. It gives you financial flexibility in this uncertain period,” End said.
However, people often underestimate how much they will spend on the road, even if they try to be frugal by grilling meals or cooking in the RV and spending relaxing evenings at the campgrounds.
“You’re not going to spend all your time in your RV,” End said. “You want to plan for entertainment, going out to dinner, stopping and exploring. That’s where people underestimate it the most.”
RV life will also have additional expenses you won’t experience on a cruise ship, such as gas, campground fees, ongoing maintenance, phone, internet and insurance. “It’s not like you just give up all these expenses,” End said.
Cruise Line Costs
Melanie Musson, finance expert at Quote.com, estimated that life on a cruise ship would cost at least $8,000 per month. “If you want luxury accommodations, you can expect to pay $15,000 per month or more,” she said. “That would be your only expense, though.”
“Retiring on a cruise ship can be cost-effective compared to traditional retirement options, as it consolidates expenses such as accommodation, food, entertainment and travel all in one package,” said Lauren Gumport, vice president of communications and brand at Faye Travel Insurance.
However, it might only be cost-effective if your alternative includes spending more than $8,000 per month on a different type of retirement lifestyle.
Bottom line: For one year on a cruise line, you could purchase a luxury RV. But, you’d still have other costs to consider after you buy the vehicle, while retiring on a cruise line could minimize other monthly expenses.
Insurance and Healthcare
As retirees get older, quality medical care becomes a consideration. “Everyday problems can be easily treated on a cruise ship, but if you need specialty care, you won’t find that on a ship,” Musson said.
Living in an RV allows you to travel to doctors you choose anywhere across the U.S., and potentially even Mexico for more affordable care.
On a cruise ship, you may have to resort to doctors at the nearest port, or pricey medevac services.
Friends and Family
Social aspects also weigh into the choice of retiring on a cruise ship or in an RV. “When you’re working, you have all these social engagements, relationships with co-workers and a big support network,” End pointed out.
A nomadic life may be exciting for a while, and you’ll make new friends wherever you go, on land or at sea, experts agreed.
“Large boats with large crowds foster a vibrant community atmosphere, allowing you to form relationships and socialize with other passengers and crew members from around the world,” Gumport said.
An RV gives you an opportunity to visit family and friends, but, ultimately, you might be ready to put down roots in a hometown again. As you get older and travel becomes tiring, you might want to be closer to friends and family or healthcare professionals who can provide consistent care.
At that point, transitioning from a cruise ship might mean starting from scratch, whereas you can sell the RV to pay for more permanent housing.
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This article originally appeared on GOBankingRates.com: Cruise Ship vs. RV Retirement: Which Is the Better Deal?
