Can You Afford To Be A Grey Nomad?

By Tony Rigby

news.com.au

THEY roam the highways in motorhomes and caravans with names like "Lingerlonger'' and "Goneroamin'' in search of that endless holiday lifestyle.

They are the famous (or infamous) grey nomads -- retirees living out the fantasy that sustains workers through their toughest days -- living an easy and economical life on the road touring this great country.

There is no end in sight for this interesting social phenomenon, with an estimated 17,000 caravans to be sold around Australia in the next 12 months -- and 80 per cent of those will be bought by people aged over 50.

So what can the next generation of grey nomads do to make sure they are financially fit for the

long road ahead?

Here are five simple tips to help make this dream a reality.

Know the costs before you go

First, a word of warning. Potential nomads are advised to rent a van for a week or two and see whether the dream actually fits reality and whether they are physically capable of unhitching, hitching, reversing and parking.

In other words, you must try before you buy.

First on the shopping list is the caravan or campervan, known on the road as a "rig''.

This can cost anything from a few thousand dollars to a few hundred thousand.

A lot of retirees buy new, live the dream, don't like it or don't want to do it a second time.

So it may pay to research the used van and RV market and compare. Depreciation has to

be factored in.

Buying a near new or relatively new van can save you quite a bit by avoiding the GST and dealer profit. But remember to have it inspected.

The next biggest expenses are accommodation, food and fuel. Food is fairly constant and comes in at about a $100 a week for a couple. Accommodation for a caravan park is generally $20-$30 a night but can vary depending on the facilities offered. Accommodation costs can also be reduced by staying in National Parks or by camping in the bush for free.

It stands to reason that petrol costs are totally variable, depending on how far and how quickly you travel.

There is also variation in fuel prices across states, and the further nomads get from the big cities the more expensive the fuel will generally be. In the bush, be prepared to pay 30-40 per cent more for fuel than in the city.

The size of your campervan or trailer should also be factored in -- do rough calculations based on the known fuel consumption of towing your rig.

Budgeting

The next question is how to fund the new lifestyle? Once the traveller has costed out their rig for the next three months to five years, how's the budget looking?

A tip here is to speak with some grey nomads who have actually done some touring and get an indication of what it really costs.

It may pay to rent out the empty home and use some of the income to fund the tour.

The rent will obviously need to be declared as income but rates, insurance and other related expenses can then be claimed as tax deductions for the period the property is rented.

A smart budget should also include a reasonable allowance for making the most of the time away.

Inevitably, travellers will want to do extra activities such as day cruises, but these can end up costing quite a lot of money unless the nomads remain very disciplined in their spending.

A budget should also allow for maintaining the vehicle on the road. If the van breaks down, it will more than likely happen somewhere where the costs of getting it fixed are horrendous, so plans need to be made for regular servicing and maintenance.

Working holiday

Research commissioned by the Department of Education and Training on the "potential'' for grey nomads to close the skills gap found nearly 60 per cent of those surveyed were interested in taking up paid work while on tour.

While the big trip is often taken in the early years of retirement, more baby boomers are looking at it as part of scaling down their involvement in the workforce.

With more older Australians wanting to maintain some type of working life, people are naturally asking what can they do while on the road and if they can easily re-enter the workforce after such an extended break.

Insurance

A big trip is also as good a reason as any to review insurance.

Is the potential nomad's life, trauma and health insurance up to date and appropriate for their needs? Do they have interstate ambulance cover? Is their home adequately insured -- and will the cover still apply if they are leaving the property unoccupied?

Some insurance policies have conditions where the insurance is voided if the house is uninhabited for an extended period.

Hit the road

Older travellers are encouraged to take precautions. They should plan well, take their time and be prepared. Even if the nomad has a set-and-forget investment portfolio, it's a good idea to leave some contact details with their investment adviser and make time to review their investments before they go.

The review should focus on whether there is anything on the horizon that may affect their investments and, if so, what actions or plans can be put in place to deal with them.

Once the new nomad has covered all these bases, then it's time to hit the road and start experiencing all that this great lifestyle has to offer.