When we think of retirement, we often imagine ourselves exploring the globe and taking advantage of the seemingly limitless amount of free time we suddenly have on our hands. In some regards, retirement is the ideal period of life for travel, since work-related constraints go out the window. On the other hand, because most seniors are on a fixed income, affording those trips is often easier said than done. Throw in the fact that retirees don't tend to do a good job of budgeting for travel, and it's no wonder so many find themselves financially stressed down the line.

Specifically, retirees today are finding that travel expenses are 40% higher than expected, according a Capital Group study. Worse yet, 58% of seniors don't budget for travel in retirement at all, or so reports Merrill Lynch.

Senior couple looking at a map


If you're hoping to see the world once your career comes to a close, then budgeting for it ahead of time is crucial. Here's how to start.

1. Figure out how much money you can spend on travel each year

It's pretty much impossible to plan your trips without a solid sense of how much money you have available to spend on them. As a general rule, you can withdraw about 4% of your nest egg's value each year without having to worry about running out of money in retirement. If your savings balance totals $2 million, this gives you about $80,000 a year to work with.

Of course, you'll need to subtract taxes (unless your savings are housed in a Roth account) before you do anything else, since 401(k) and IRA withdrawals are considered income, which the IRS will want a piece of. From there, you'll need to estimate your basic living expenses, like housing, food, clothing, and healthcare. Once you've accounted for these essential costs, you'll see how much money you'll have left over each year for travel.

2. Prioritize your trips and understand their costs

Once you get a sense of how much you can afford to spend on travel, your next goal should be maximizing that money -- specifically, by identifying the trips that are most important to you and getting a solid sense of how much they'll cost. Whether you decide to research your trips independently or through a travel agent is up to you, but the key is to get an accurate estimate of how much each adventure will cost rather than just guessing at it.

Imagine, for instance, that during your first year of retirement, your primary goal is to spend two weeks in Tuscany, but you'd also like to take a Caribbean cruise. If you estimate the former at $4,000 and the latter at $2,000, but you end up being off by several thousand dollars, you may have to forgo that cruise the first year. But if you take that cruise first and then come to find that you don't have enough money left over to swing that Tuscany trip, you could end up disappointed.

One other thing: It pays to think ahead when mapping out your retirement travel goals, and bump up those trips that are more physically demanding than others. After all, you'll probably have more energy to hike the Inca Trail at, say, 68, than you will at 74.

3. Add a buffer

Once you determine how much your dream trips will cost, it pays to see if there are any senior discounts out there you can snag. You never know when you might catch a break on car rentals, meals, or even hotels. That said, it's even more important to build a buffer into each trip's budget to account for the unknown.

For example, you might reserve a cruise and assume you'll spend the bulk of the week enjoying that ship's free activities. But what if a few last-minute excursions end up catching your eye? Those can be expensive, but they might also represent once-in-a-lifetime opportunities, so leave yourself some wiggle room. Similarly, assume that incidentals like taxis and tips will end up costing more than expected. Finally, invest in travel insurance. It'll cost you more, but it'll also offer some degree of protection if your plans are disrupted or you encounter a health issue that forces you to cancel or alter your itinerary.

Traveling during retirement can make your golden years extremely meaningful and rewarding. Just be sure to budget for it accordingly so that it doesn't wreck your finances at the worst possible time.