Personal Finance

We're 62 and have $1 million saved for retirement - should we pay $20,000 to take our family to Disney world?

Kristin Hitchcock

Published: November 5, 2024 12:28 pm

24/7 Wall St. Key Takeaways:

• It’s okay to spend on big experiences if you’ve laid the groundwork for financial security. 
• Retirement isn’t just about keeping money in the bank; it’s about using that money to live the lifestyle you want. 
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

I like to watch Dave Ramsey’s show if only to listen to the wacky positions people get themselves in. However, one recent caller was very different. The 62-year-old caller shared her plans to take her entire family on a trip to Disney World, covering expenses for around 20 people. 

Dave Ramsey’s advice: Go for it. 

Here are some interesting key takeaways from this exchange: 

1. Financial Freedom in Retirement

The caller is in a strong financial position with over $1.1 million in her nest egg, no debt, and a steady income from pensions. She’s not only financially independent but can afford to live comfortably on her pension without touching her retirement savings.

For retirees in a similar situation, a one-time large expense like this can fit very easily within a long-term budget without derailing their whole financial plan. 

Ramsey’s advice to go for it highlights that accumulating wealth doesn’t mean you have to just sit on it. You can also use it to create memorable experiences!

2. The Value of Experience

Yes, saving money is important. (We even have a whole article on Warren Buffet quotes on saving that demonstrate this.) However, splurging from time to time has its place, too. Once you have a nice nest egg built up and have paid off debt, splurging on a vacation or two isn’t going to put you in a bad financial position. 

In fact, this is a huge reason why we focus on finances – so we can do these experiences without putting ourselves in debt. 

3. Assessing Sustainability

Of course, you don’t want to splurge $30,000 and then find out you’ll need it later! The caller is reasonably cautious about spending her retirement funds on a vacation. However, at her age and with her expenses, this spending won’t have a major impact on her financial security. 

Simply put: she’s earned it!

A healthy retirement balance, no debt, and a sustainable income allow her to take this vacation. Context is key, though. This choice could look very different for someone without such a solid retirement base. 

4. Be Cautious of “One-Time” Spending Habits

Of course, Ramsey’s green light was reliant on the fact that this is a one-time expense. It’s important to keep it that way. Her savings could quickly dwindle if the caller decided to splurge on a vacation every few years. It can add up if it becomes a habit. 

When you decide to do something “one time,” it’s important that it really is one time.