Villa Vie Residences made a splash this spring when it announced its “Endless Horizon" program. The program offers a three-and-a-half-year cruise for $299,999 for individuals and $499,999 for couples, enabling passengers to visit all seven continents and 147 countries.
As seniors search for ways to avoid the high cost of living and healthcare across the United States, some retirees have discovered a new way to keep afloat in their golden years by signing up for a permanent cruise. Could this alternative lifestyle hold water, or is it safer to stay ashore?
While a multi-year cruise may sound enticing to satisfy one's wanderlust, financial professionals encourage Americans without significant wealth to throttle back their expectations before they flee to the sea.
A Big Splurge
Cruises don't appeal to everyone, but the prospect of permanent cruising could comprise the dreams of those who love exploring the world by water. For some, an indefinite cruise could be a way to take an elongated "golden gap year,” a rising trend among seniors worldwide.
"A client once asked for our help in evaluating a four-month round-the-world cruise and asked if $90,000 was a reasonable cost," said Jonathan Bird, founder of Farnam Financial. "The answer we shared was, of course, it's not reasonable, but if your overall financial plan supports it, do it anyway!"
This you-only-live-once philosophy aligns with principles espoused by personal finance gurus like Bill Perkins and Ramit Sethi, who both advocate for people spending big on the things that are important to them.
As more people anticipate a lengthy retirement, longevity risk assessment becomes necessary. A significant swath of Americans now expect to spend almost four decades retired; Corebridge Financial reports about 1 in 8 workers plan to retire before age 61. Most workers (54%) aim to celebrate their 100th birthday.
The median retirement savings for Americans between 55 and 64 is just $185,000, which could pose problems if budgeted over several decades. For retirees without significant net worth, a never-ending cruise will blow their budget.
Staying Afloat
If one's 401(k) account won't cover the cost of a permanent cruise, selling the house is another way to raise cash.
Selling this major asset to facilitate a lifestyle change is not unheard of, as trading a house for an RV is an established trend among older Americans. Downsizing from large family homes to apartments also appeals to senior empty nesters.
Permanent cruising may sound similarly enticing. Yet retirees will need to weigh up the loss of security of a home base. By trading in the house for an endless cruise, there may literally be no way back home.
"Retiring on a cruise ship is not a good idea for most people," says Angela Dorsey, founder and financial Planner at Dorsey Wealth Management. "After a while, you will start to miss the familiar comforts and surroundings of a home."
Alternatively, it may appeal to retirees nearing the end of their lives.
"It's wise to sell your residential home to pay for a cruise only if you won't live long enough to need it back!” says Bird. "For those who are terminally ill, such a proposition may be well worth it."
Not for Newcomers
Cruising for three years is a big commitment. That's why it may appeal most to seasoned cruisers who have already found their sea legs.
"The best scenario where I see this working is if a person or couple has experienced many cruises and knows they will enjoy it," says Dorsey. "Only if they want to retire to a travel lifestyle and have calculated that they will save money by living on a cruise ship. If they own a home, they can rent it out to generate income while living on the cruise."
For some, generating passive income may be the only way to sustain a comfortable retirement, even preferable to liquidating one's home or dipping into 401(k) savings to travel abroad.
For this reason, some advisors describe these cruises as "floating timeshares," hinting that they represent a financial disaster.
"Only those who get a thrill out of seeing their life savings go up in smoke should consider selling their homes to buy into this," explains Bill Promes, principal at Austin Creek Capital. "If you want to go back home, you'll be out 40% of your investment (if you're lucky) the day you sign the papers."
There are downsides even for those who may not have much time left.
"In theory, something like this should be good if you are terminally ill," Promes continues. "However, how do you continue medical treatments if you are perpetually on a cruise?"
While retiring on the open seas shouldn't be ruled out entirely, Wealthtender financial advisors agree it may not work for most people.
Nonetheless, a permanent cruise offers retirees a new option to consider as an alternative to a traditional retirement community or assisted living facility. Americans who can afford the financial risks may find new meaning in the phrase “sailing off into the sunset.”
