Does living in an RV make financial sense?

The RV Lifestyle

by Rick Kahler

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"What do you plan to do when you retire?"

"See new places!"

In my experience, the number-one activity most people look forward to when they retire from earning an income is travel. Seeing and experiencing the world has never been easier. True, air travel is rarely easy or pleasurable, and it can be expensive. Yet, with a little planning and work, travel can fit easily into many retirees' budgets.

The most affordable option is becoming a part-time or full-time RVer. While to me driving around the country in a motorhome or hauling a camper sounds like a lot of work, it's very pleasurable for a lot of folks. There are no security lines, tour schedules to keep, or nights spent stranded in airports. You may not go fast, but you get to go where you want, when you want.

RVing doesn't mean you need to buy a motorhome as long or as pricy as a semi-trailer truck. It can be as simple as pulling a small camper/trailer or a fifth wheel. While you will need a heavier gas-guzzling vehicle than a Toyota Avalon to pull your rig, the costs can be significantly lower than staying in motels. This is the case even when you consider costs like auto insurance, depreciation, tires, maintenance, and camping fees. You can even minimize the camping fees as long as you're okay with a view of the local Walmart's parking lot.

Judging from retirees I know, RVing can become a lifestyle very quickly. RVers develop networks and associations with other RVers to share experiences, costs, and information. Some of my clients enjoy the lifestyle so much they have actually sold their homes, preferring the RV as their primary residence.

This is when RVing can take financial efficiency to new levels. By not owning a home, you can take the money previously tied up in a personal asset and make it produce income.

Let's illustrate with some numbers. It isn't uncommon for couples in the Black Hills who are in their 50's or 60's to own a paid-for home worth $250,000. That amount, invested in passively-managed mutual funds diversified in five or more asset classes, reasonably produced an annualized return of 6% over the past 10, 20,or even 30 years. If you leave half this return to help keep up with inflation and withdraw the other half, you'll have about $625 a month in new income.

The good news is you don't need a lot of money to retire to an RV lifestyle. The extra $625 a month from selling a home, combined with Social Security and a modest IRA, can go a long way. I know several RVers who do nicely on such income.

Here's how it might work for a typical couple. A total amount saved to IRA's of $450,000, plus the proceeds from selling their home for $250,000, would produce income of $21,000 a year. Adding this to their combined Social Security income of around $30,000 a year would give them $51,000. That's more than enough to enjoy modest but comfortable RV living.

An added benefit for residents of a state like South Dakota, which has no income tax but relatively high property tax, is a lower tax bill.

I have just one word of caution. Before you sell your house, make sure full-time RVing is right for you. Take a trial period of at least a year, renting out your home while you travel. Then, once you decide the roving lifestyle is what you want, you can cut your ties to terra firma and set out to enjoy the freedom of the open road.

Rick Kahler

Rick Kahler, MSFP, ChFC, CFP, is a fee-only financial planner and author. Find more information at Contact him at or 343-1400, ext. 111.

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