01.26.22

Traveling in the new normal

The pandemic might have clipped your wings, but it looks like travel will be back on the calendar in 2022. Here’s what to expect.

The realities of the last couple years may have you looking forward, even more than usual, to a vacation. And you’re not alone. The rollout of COVID-19 vaccinations for both children and adults has experts expecting travel to rebound in a big way this year. A 2022 Travel Trends ForecastOpens in a new window by vacation rental website Evolve reports that 80 percent of 5,000 survey respondents said they are actively planning travel in 2022, and 59 percent said they plan to take three or more trips before the year’s end. 

If you’re contemplating a trip, here are some trends and new realities to keep in mind.

The return of international travel

Many people are making up for lost time with a more lavish trip this year. That could mean a vacation that’s longer or farther flung—especially now with borders more open. According to Booking.comOpens in a new window, seven of the eight top-trending destinations for 2022 are international and include Taichung, Taiwan; Gramado, Brazil and Santo Domingo, Dominican Republic. 

If you’re headed overseas, remember to notify your bank and credit card companies in advance to avoid tripping fraud protection alerts. “[Otherwise,] if you suddenly get some charges from Budapest, and they shut some things down, that could put you in an awkward situation,” says Rob Stevens, TIAA Financial Planning Strategist. 

Stevens also suggests downloading a currency app onto your phone to keep handy for conversions, and to research the exchange rate in your destination before leaving town. “In some places, you can get hit with a lot of fees for transactions, so it may be worthwhile to get some currency here first,” he says.

Vacation rentals vs. resorts

One pandemic trend that’s expected to continue is the popularity of renting a condo, cabin or house. 

Because pricing and policies vary wildly, it’s crucial to read the fine print of your rental agreement. “You may get a price, but then there may also be cleaning fees that you might not be expecting,” says Mark Schrader, TIAA Financial Planning Strategist. Also check for responsibilities that you, as a renter, must uphold—such as taking out garbage—in order to avoid extra fees or forfeiting your security deposit. 

For travelers ready for a resort vacation and its amenities, there are considerations there as well. “If you’re going to a resort, it’s easy to click the box for the all-inclusive all-day buffet and unlimited drinks thing,” Stevens says. “[But, if for you] breakfast is a Danish and a coffee, and if you’re a modest drinker…you might be better off going a la carte.” 

Whatever you choose, pad your budget if you plan to rent a vehicle. “Rental car costs have gone up, perhaps significantly, from the last time you’ve traveled,” Stevens says.

To insure or not to insure

With lingering pandemic uncertainty, how important is travel insurance? The answer depends on the nature and cost of your trip, and your personal risk tolerance. “In some cases, some level of travel insurance is required,” says Daniel Ruppel, TIAA Financial Planning Strategist. “Some countries may require it to cover things like medical expenses.” 

Optional travel insurance can be a wise investment for a very costly trip, Ruppel says. “But bear in mind how much risk you’re willing to accept, because [it isn’t] cheap. Estimates range from 4-10 percent of the cost of a big trip.”

Not ready to travel yet? Many airlines have extended expiration dates for unused vouchers until the end of 2022.

Coverage varies, so consider likely scenarios: Will the policy cover your losses if you test positive for COVID-19 and have to quarantine? What if there are border closures or lockdowns? Schrader also suggests checking whether the policy demands a specific reason (and proof), or if you can just cancel. 

Note that more-flexible airline and hotel cancellation policies have rendered travel insurance somewhat less worthwhile. “Traditional insurance may not be necessary if you can cancel a flight and receive a credit that you plan to use,” Ruppel says. “You also may be able to cancel some hotel nights and receive a refund.” 

Not yet ready to take off

Trends aside, some travelers might not feel comfortable booking any trip just yet. If that’s you, consider what you can do with the money saved. “If you don’t already have a fully-funded emergency fund, you could look at that,” Schrader says. If you have existing debt, you could consider funneling the savings toward your pay-off plan, he says. 

Or perhaps there’s an opportunity to spend on something fun and fulfilling. “Travel dollars are experience dollars in my mind,” Schrader adds. You might take an online course, or buy a membership to a local museum or botanical garden. “Maybe make sure all family members have a bicycle, so you could go on rides together,” Stevens suggests. 

If you have unused travel vouchers or airline points from previously deferred travel, now is a good time to check when they will expire. Many airlines have extended expiration dates until the end of 2022, Ruppel says. 

As for soon-to-expire frequent flyer miles that you can’t use, consider donating them to a charity, such as Miles4Migrants, which helps reunite refugees with their families, or Fisher House Foundation’s Hero Miles program, which supports travel for injured military service members. “The donation of airline miles is not tax-deductible,” Ruppel says. “Yet, if airline miles are going to be expiring, it can still be a valuable and positive thing to do. Check with your airline, because they have developed partnerships to facilitate this very kind of thing.”

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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.