Being Financially Prepared for Full-Time Travel: Part 3 - Financial Independence

When I was considering the best titles for Part 3 of this series, I considered using the terms “Retirement” or “Future Income Savings,” but ultimately decided on “Financial Independence.”

Typically, when we think of retirement, we think of working until we are 65 and living off of the savings we have accumulated.  Many people, (myself included!), are starting to challenge this traditional idea of retirement.

The term “Financial Independence” seems to be gaining popularity, and I find that’s it’s a much more exciting way to describe retirement.

Financial Independence is the point in which you no longer have to work for income.

Notice I said you don’t HAVE to work.  Imagine having the freedom to work (or volunteer) at a job you didn’t need!  When you don’t have to worry about your income, you can find work that truly makes you happy and feeling fulfilled.

No matter if you want to achieve financial independence in your 30s, 60s, or 80s, it’s important to think about your plan for achieving this goal.

In this post, I’m going to touch on a few things you should keep in mind related to your financial independence plan before embarking on a location-independent lifestyle.

(As a disclaimer, everyone’s situation is different, so it’s important you seek out professionals (Financial planners, CPAs, attorneys, etc.) to help build your plan.)

Evaluate Your Spending Plan

Your spending plan, as I discussed in Part 1, is not only your financial foundation, it’s the foundation for your financial independence plan.  Knowing how your expenses will change when you change your lifestyle is critical to ensuring you don’t run out of money!

For instance, if you are saving money by becoming a nomad, can that extra savings help accelerate your path to financial independence?  If you are RVing around the country, could your expenses be higher than if you stayed at home?

Some Full-Time RVers may consider selling their house and downsizing to an RV.  If you have extra money left over from the sale, you should consider the best place to invest those funds.

For example, if you sold your house and had $350,000 leftover, paying cash for a $150,000 Class-A motorhome ties up that money in an asset that will lose value.  Instead, it might be better to borrow the money for the RV and invest the rest into a low-risk fund that grows at a rate higher than your RV loan interest. Remember, be sure to speak with a professional about your specific situation!

Once you have an idea of your expenses, you can start to estimate how much passive income or savings you might need to have before you no longer have to work.

Passive Income

Having an income stream that requires little to no upkeep is called Passive Income.  It’s a great way of reducing the amount of money you need to save for retirement.

For example, if you know you will need $5,000 a month during your financial independence, that income can either be funded by your savings or passive income.  Most people will just withdraw the money they need from a retirement account such as a 401(k) or IRA.  That requires hundreds of thousands, if not millions of dollars in savings to last the rest of your life.

Let’s say along with your IRA savings, you also invested in a few rental income properties.  If those rental incomes provided you with $4,000 a month in profit, then you only need $1000 a month from savings to fill the gap.

The exciting part about passive income is that it can help you achieve financial independence much quicker than accumulating savings.

As you live your life on the road, think about how you could use your experience to build passive income.  Could you teach something specific from your experience by writing a book or building a course?


As I mentioned, the other option for income during retirement, or financial independence, is accumulating enough savings to cover your expenses for the rest of your life.  This can take a long time which is why most people don’t retire until they’re 65 or older.

If you are working for a company who provides certain types of pension plans, this can technically be another option.  Pension plans (specifically Defined Benefit plans) are provided by employers as a retirement benefit.  Your salary and the number of years you worked for the company will typically determine how much income you receive from your employer after you retire.

These types of pension plans are becoming more and more rare these days, plus you would typically need to work 30-40 years with the company before your benefit reaches the proper level to cover expenses.

Savings strategies don’t change too much if you’re living life on the road; however, certain financial institutions may give you a hard time if you can’t provide a permanent physical address.  (We ran into this issue when opening a new IRA, but they did accept the address for next-of-kin.)

Keep in mind that savings into 401(k)s or IRAs will tie up your money until you’re 59 ½.  If you want to achieve financial independence at an early age, you might consider investing in a Roth IRA or other options that give you access to your money sooner, without penalties.

Begin with the End in Mind

When you’re considering an exciting new lifestyle, it may seem counter-intuitive to think about your exit plan; however, a location-independent lifestyle is not for everyone, and even so, you may not want to live this way after 2, 5, 10, or 20 years!

You should consider what life will look like if and when you choose to establish roots and end your nomadic journey. For instance, if you plan on purchasing a house after you are done RVing around the country, that will be a significant expense and will increase your yearly living expenses.

Additional expenses you might incur during a shift back to a less-mobile lifestyle are important to consider in your financial independence plan.  Most people are worried about running out of money in retirement, but planning for multiple scenarios can go a long way in avoiding that situation.

What does financial independence look like for you? Would you retire early? Take a more fulfilling job?  Let us know in the comments below!