Travel can be surprisingly cheap but don't skimp on medical cover

We're off. Every year thousands of empty-nesters head off for an extended OE.

That may be anything from doing the loop of honour of Australia in a campervan to travelling overland across Europe and Asia. Done cleverly it doesn't necessarily cost them their life savings.

Aucklanders Chris and Fiona Miller have taken 18 months out from the rat race to travel around New Zealand in their campervan "Rafe". At ages 58 and 60, they're too young to qualify for NZ Super and are combining work with travel.

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Chris runs his business on the road from his iPad with a mobile data service. The photographer, who worked from home anyway, is still able to earn an income remotely and is also hoping to commercialise his blog Buggeritweareoff.com.

But what's really made the Millers' travels affordable is their dramatic downsizing from the family home, now earning rent from tenants.

One of the real eye-openers for the Millers is just how much less they spend living in a campervan. The house pays for itself, so the couple are no longer forking out for rates and house insurance, making day-to-day life a lot cheaper. Even after tax, the couple are saving.

The Millers have also ditched the $200 a month electricity bill and spend much less on entertaining friends. Food costs are lower, says Fiona, because they don't have a big fridge to store excess in.

They don't buy as many "things" because there's nowhere to store stuff in the van. "It has been so liberating to get rid of all the stuff," says Chris.

Their residual belongings are stored for free, so they avoid commercial storage charges that can cost hundreds of dollars a month.

When on the road the Millers pay for fuel and the caravan parks they visit about every five days so they can use facilities such as washing machines. Insurance on the van is $1300 a year.

The experience has changed their outlook.

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When they eventually return to living in a house they will downsize dramatically from their former home, which will cost them less.

Not everyone travels in a campervan, of course. And members of the empty-nester OE set don't always want to stay on the bones of their backsides in backpacker hostels. If they're willing to live relatively modestly, however, it's possible in many countries to rent an apartment locally and eat out regularly for less than the net rental after tax on their mortgage-free home.

The costs of day-to-day living and travelling for the great OE are as long as piece of string. It depends on whether you want five-star luxuries or to live like a local.

Google is your friend when it comes to costs for individual countries, although there is a rule of thumb that you multiply the cost of accommodation by two or three times to come up with a daily figure for all expenses in a country.

The last thing you want is to be stranded overseas with a mounting medical bill and struggling to find the money to pay for it or to bring you home.

Many travellers use apps such as Trail Wallet or standard spending trackers to monitor their travel expenses. On top of airfares, accommodation, food, activities, vaccinations and visas, the biggest travel cost is insurance and it shouldn't be skimped on.

You'd be mad to go overseas without medical cover. "The last thing you want is to be stranded overseas with a mounting medical bill and struggling to find the money to pay for it or to bring you home," says David Boyle, investor education general manager at the Commission for Financial Capability.

Last year, Southern Cross Travel Insurance paid 10 claims of more than $165,000 for accidents and illnesses such as a brain abscess, a case of encephalitis and a spinal fracture.

The big problem for the over-50s with insurance is pre-existing conditions.

Most travel insurance policies exclude these unless you pay an extra premium to cover the illness, says Will Ashcroft, chief sales officer for Allianz, which sells policies through the House of Travel, United Travel and the AA.

Almost everyone in this market has some sort of pre-existing medical condition, says Ashcroft, and they wouldn't travel if they couldn't cover them. The cost of a 12-month policy for a couple aged 65 and 67, one with high cholesterol and the other having suffered a heart attack a couple of years ago and with high blood pressure, is more than $2100, about $700 of it for the pre-existing medical conditions.

Insurers such as Southern Cross offer annual frequent-traveller policies where you can travel as much as you want over a 12-month period providing no individual trip out of the country is longer than 90 days.

Read your policy's fine print, Boyle advises.

For example, it's worth considering what would happen if you want to stay away longer than originally planned -- can you extend the policy to cover the extra time you'll be away?

Most domestic travellers are covered by their home contents policies.

Full-time campervanners need specialist contents insurance, says Dave Culpan, general manager of Covi Insurance, which caters for this market. The cost of contents insurance is $282 a year for $10,000 of cover and $442 for $20,000.

NZ Super can be a sticking point when it comes to overseas travel, limiting the time away in most cases to 26 weeks if you want to keep being paid. Travellers who stay away for longer may be asked to pay back all of the NZ Super paid since they left.

The rules surrounding NZ Super and travel are quite complex and anyone considering an extended trip overseas ought to read the provisions carefully at tinyurl.com/NZSuperTravel.

One way to keep travel costs down is to work while away in a job such as teaching English, or to volunteer. Many empty-nesters do it. Sometimes paid and/or volunteer roles come with free or cheap accommodation and possibly travel costs.

Volunteer Service Abroad (VSA) says the average age of its volunteers is 47, pulled up by a lot of skilled retirees. VSA's oldest volunteer is aged in his 70s and has completed four assignments.

Although VSA volunteers don't get paid, their food, accommodation, transport and health insurance are paid for, they continue to receive NZ Super for the duration of their assignment and if they have property back home they can let it.

Volunteers are, of course, working. But most say it's not like the 9-5 grind back home and they have plenty of time to get involved in local community activities.

They are also on the ground in a foreign country if they want to travel a bit more at the end of the assignment without having to pay the airfares to and from their destination.

There are many ways to save during overseas travel. Bruce Lochore, chief executive of the New Zealand Motor Caravan Association, says it's common for his members to buy a campervan in Australia, the United States or Britain to leave in storage when they return to NZ -- going back for multiple trips.

Some bring their vans back -- especially from Britain.