We're 57 With $7 Million. We Want to Spend $800K Traveling the World for Two Years. Are We Crazy?

We both had parents who passed away in their 60s, so we want to take advantage of our relative "youth" while we can. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.You are now subscribedYour newsletter sign-up was successfulWant to add more newsletters?Delivered dailyKiplinger TodayProfit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. 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Question: We're 57 years old with $7 million saved. We want to take a two-year career break and spend $800k traveling the world until we're 59, then return to work and retire at 65. We each had a parent die in their 60s, so this period in our lives feels like it may be our best chance for such an adventure. Are we crazy?Answer: Once you've accumulated a certain amount of wealth, you may be inclined to start spending some of that money on lifelong goals, like travel. And it's easy to argue that with $7 million in savings, you've more than earned the right to an extended trip spanning two years.But what if you're only 57 years old? You may not be ready to end your career. Moreover, you may want to take your dream trip soon, especially if you've seen a parent pass away in their 60s.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail.In that scenario, an extended sabbatical could be a potential solution. And if you've run the numbers, you may be looking at spending $800,000 over two years before returning to the labor force for roughly another half-decade to close out your career.It's a move that carries some risk. But if you plan accordingly, you may be able to pull it off.For many people, taking a two-year career break with an $800,000 price tag may not be possible. With $7 million saved, it could be your reality.While $800,000 is a lot of money, you're keeping close to 90% of your portfolio untouched. And you're also leaving yourself with a substantial sum of money left over.Steven Schiff, CFP and Managing Director at Fortuna Wealth, says, "Honestly, you’re not crazy at all. With $7 million saved, you’ve built a substantial nest egg that can support a once-in-a-lifetime experience like this."That said, you do need to plan carefully. Cynthia Pruemm, founder and CEO of SIS Financial Group, says it's important to understand where the money will come from to fund your sabbatical, given your age."Since you are 57 years young, you will not be able to take a distribution out of your IRA or 401(k) accounts without paying the 10% penalty," Pruemm explains. "With a Roth IRA, you can withdraw contributions at any time. However, you can't withdraw capital gains before age 59.5 and until the account has been opened for at least five years."Pruemm says that if you're planning to fund your experience from a taxable account, you'll need to be prepared for short- or long-term capital gain taxes on withdrawals.The best option in her book? Pay the $800,000 out of a cash account.Schiff also says that if you're going to move forward with your plans, preparation is key."Ensure that your investments are positioned properly, your estate plan is up to date, and you have the right insurance coverage in place," he says."The risk in taking an extended $800,000 sabbatical ... [is] what happens when your travels are over."The risk in taking an extended $800,000 sabbatical isn't necessarily the large withdrawal and two years of forgone earnings. Rather, it's what happens when your travels are over.Getting back into the workforce isn't a given, Pruemm cautions. And while $6.2 million is a lot of money to retire on if necessary, you'll need to factor in early retirement costs like health insurance. You'll also need a backup plan in case the market crashes during your sabbatical or shortly after, since you may not be able to go back to work right away or at all."It would be wise for them to sit down with a financial adviser to put together a retirement plan and have different scenarios figured out before their sabbatical," Pruemm says. "Yes, they will have a lot of money left if they do not join the workforce again. But what happens if there's another dot.com bubble or financial crisis? What happens if their health takes a turn for the worse?"Of course, you may find after a two-year sabbatical that you don't have the desire to go back to work. And Schiff says with the amount of wealth you've accumulated, you may not have to."But prior to making that decision, please consult a financial adviser about your individual situation," he suggests. Setting yourself up with the right investments could make a two-year, $800,000 sabbatical a less risky endeavor. Pruemm recommends hiring a financial adviser to manage the portfolio while on sabbatical to add some security and peace of mind.If you'd rather manage your assets yourself, Pruemm says, "I would recommend putting all investable assets in high-yield principal-protected investments if they’re not able to keep an eye on them while on sabbatical."But all told, your plan to escape the grind for two years and see the places you've always dreamed of is doable, provided you understand the risks and set up your retire-at-65 retirement plan in advance. And if so, Schiff recommends using the wealth you've built to meet a lifelong goal.He also has one piece of non-financial advice."Take plenty of photos and make the most of your journey around the world," he says.Do you have a tricky money situation? We want to hear about it for an upcoming advice column. We're interested in retirement-related financial dilemmas, especially those that impact relationships with partners, friends and family. You will remain anonymous. Submit your question to KipAdvice@futurenet.com. Not all questions will be published.Article continues below. ⬇️Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Maurie Backman is a freelance contributor to Kiplinger. She has over a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. She has written for USA Today, U.S. News & World Report, and Bankrate. She studied creative writing and finance at Binghamton University and merged the two disciplines to help empower consumers to make smart financial planning decisions.