So You Want to Start a Travel Business in Retirement


I’m thinking about starting a travel business in retirement. Have you talked with people who have done this? Any insights?

This is a popular topic. For retirees with an entrepreneurial bent, a travel company seems like a great idea. After all, such work holds the promise of seeing the world and getting paid to do so.

Yes, we have talked with retirees who have taken this path—as travel agents, writers, tour guides, cruise planners. Many seem to enjoy their new careers, but, as with any small business, there are drawbacks.

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A retired middle manager for General Electric, who started a travel company that offers private excursions to Europe and elsewhere, told us the work “sounds glamorous.” But she quickly listed some of the challenges involved: changes in clients’ plans; a never-ending series of questions about restaurants, nightlife, logistics and dozens of related issues; and unexpected events (one she recalled vividly: a suddenly active volcano) that invariably require rebooking customers and rescheduling activities.

Her best advice (and a suggestion we have heard frequently): find a niche and excel at it. “You can’t succeed with general travel; everyone’s selling regular travel,” she says. “A niche can be a specialty activity—like food, wine, cooking, spas, diving—or destination specialization. And it takes time to become an expert.”

If you’re thinking about starting a business in retirement, travel or otherwise, start with the basics: The Small Business Administration has a number of valuable resources, as does the Ewing Marion Kauffman Foundation, AARP and SCORE. For travel in particular, the Travel Institute, based in Framingham, Mass., offers a good list of industry associations and publications where you can begin to educate yourself about travel jobs.

Interestingly, many of the retirees we have talked to about this topic haven’t started their own business; rather, they work for groups or in settings that allow them to travel for little or no cost. (And in some instances, they get paid.) Among them:

CoolWorks says it helps people find jobs in “national parks, ski resorts, dude ranches, retreat centers and everything in between.” (In particular, under “Resources,” see the site’s “Older and Bolder” page.) Modern-Day Nomads is for “creative professionals” who want to travel the world. Transitions Abroad helps connect job seekers with opportunities overseas. And Workamper News advertises job openings, primarily for “RVers,” in recreation, travel and tourism.

If I am over 70½ years old, may I transfer my required minimum distribution to my Schwab Charitable Fund, which is a donor-advised charitable fund, without having to include the distribution as taxable income?

I’m afraid you can’t do this.

This question refers to “qualified charitable distributions,” a topic that is generating a lot of mail from readers. As we discussed in an earlier column, the new tax law will make QCDs more attractive for some taxpayers.

The rules: Individuals over age 70½ can transfer as much as $100,000 annually from their individual retirement account directly to most types of charities. That transfer is excluded from your income and, if done correctly, counts toward the IRA owner’s required minimum distribution for the year.

The key word in the preceding paragraph is “directly.” The transfer “must be a direct gift to the charitable organization, and not to another supporting organization that makes the gift,” notes Ed Slott, an IRA expert in Rockville Centre, N.Y. In this case, Schwab would be considered a “supporting organization.” Thus, your strategy won’t work.

I am 56 years old and divorced. My former husband and I were married for more than 10 years. He died in 2017. My question is about my Social Security benefits. Can I begin collecting a survivor’s benefit and, at some point in the future, switch to my own benefit?

Yes, you can do this, but you need to be very (very) careful.

To start, a “surviving divorced spouse” (in the language of the Social Security Administration) can begin collecting a survivor’s benefit at age 60. Then, at 62—or later, if you wish—you can switch to your retirement benefit, the one based on your earnings history. This assumes, of course, that your retirement benefit is larger than your survivor’s benefit. (The reverse option is also available: You can apply, first, for a retirement benefit at 62, and later switch to a survivor benefit.)

This “switching” strategy can make a big difference for a divorced spouse and her or his retirement finances. (The rules apply equally for divorced women and men.) For instance, say you claim a survivor’s benefit at age 60, and put off claiming your own retirement benefit until age 70, the maximum allowed. Once you make the switch, the delayed retirement benefit will have increased significantly (about 7% annually between ages 62 and 70).

But this is also an area where mistakes can be expensive.

A study published in February by the Social Security Administration’s inspector general found that some agency staffers have failed to inform widows and widowers about their options regarding benefits. As such, some applicants are making an error in how they claim Social Security—an error that, first, effectively eliminates the possibility of switching benefits in the future, and, second, is costing survivors many thousands of dollars.

To be specific—and this gets a bit technical, unfortunately—some survivors, unknowingly, are claiming both benefits, survivor and retirement, at the same time. If you wish to keep the option of switching benefits in the future, you must apply for just one benefit at the outset, either a survivor benefit or a retirement benefit.

How costly can this mistake be? The inspector general estimates that approximately 9,200 beneficiaries age 70 and older have been underpaid about $132 million and that, going forward, about 1,900 beneficiaries under 70 will be underpaid about $9.8 million annually.

So, the lesson here is clear: If you are a survivor—a widow, widower or surviving divorced spouse—who’s about to file for any kind of benefit from Social Security, you should first ask the agency employee who is helping you to explain all of the rules and options. And to be safe, I would tell the employee that you are planning (if, in fact, you are) to switch benefits at some point in the future—and that you want to be sure that you aren’t unintentionally or mistakenly eliminating that option.

I also would urge all survivors who plan to apply for Social Security benefits to read the inspector general’s report. Go to oig.ssa.gov and search for: Higher Benefits for Dually Entitled Widow(er)s.

Mr. Ruffenach is a former reporter and editor for The Wall Street Journal. His column examines financial issues for those thinking about, planning and living their retirement. Send questions and comments to askencore@wsj.com.



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