Stockpiling Points for retirement
 

I'm about 14 years away from retirement, which as we all know generally means more of a fixed income and less discretionary money for buying airline tickets. So I've been buying points on United and American every so often when they post a deal, usually 2 to 2.5 c per point. I'm well aware that points programmes have had a tendency to de-value over time. I'd like some input around whether I should continue to do this (buying points) or just let them accrue on my credit cards and from the flights I take. Any input from FF would be appreciated!

Just my opinion, but saving points to use 14 years from now doesn't seem like a great idea due to devaluation and possible discontinuation of points programs and/or airlines. If you're getting the points for free through flying or credit cards, etc, there's probably no harm but paying 2 to 2.5 cpm for points you don't plan to use for 14 years seems crazy.

I would not buy airline miles unless I had an immediate use for them. Buying miles now for use 14 -- or more -- years from now is a bad idea, for several years:

1. You might not be alive 14 years from now.
2. The miles accumulated in many FFPs tend to become less valuable over time because of program devaluations.
3. One or more of the airlines from which you have purchased miles might go bankrupt -- yet again. While your miles might very well still be useful if the bankrupt carrier gets taken over by another, there's no guarantee.
4. If your credit is good, and you can charge an average of $1,000/month, you should be able to reap lots of airline miles/hotel points from credit-card sign-up bonuses -- assuming that they are still offered when you retire.

I ensure I spend all my points accrued in a given year, by the end of the following year.

Too many reasons not to, and frankly, what you are thinking about doing is the worst possible route for many reasons most of which were already covered.

I don't want the bluntness of my advice to obscure the kindness with which I offer it: Buying miles at $0.02 to $0.025 each, and then keeping them for almost 15 years, is an awful idea. Airline programs see steady devaluations spaced not more than a few years apart, and there's no end in sight for this trend. Save your money, invest it for 15 years. Double or triple it. If you put it in miles, it's going to be worth a fraction of what you paid.

Buy miles at that rate only to top off your account for immediate redemptions.

Bro put the money you use to buy points in some investments and you can use that stash to buy your airfares 14 years from now. A much safer method. lol

How about using the points now and taking the money you would spend on the tickets or such and either putting in into some sort of account or buying a savings bond that would mature for your desired time?

Points stashing for that long has far too many variables and challenges.

Thanks to everyone... I like the idea of taking the money and investing it over time. Much better idea.

cheers.

robly

<mod hat off>
If you really want to gamble, buy some airline stocks :o
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The US Stock Market has gone up, on average, abt 10% per year from the beginning. Forget buying miles. Invest in the world economy.

Agreed with the fellow FTers on this one. I have purchased frequent flyer miles at a discount (i.e. UA's promotion last Jan) but only did so knowing that I'll be using them for an extremely high value redemption (i.e. LH First class) in the immediate future that I would otherwise not pay out of pocket for. Airline program devaluations are common and Airlines and/or their programmes go bust somewhat regularly (just ask those who collected miles to Sun Country or AirBerlin's frequent flyer programme). Most importantly, how do you know you're using the correct airline/alliance for your needs? You may buy some UA points but suppose they don't have availability to where you want to go - then what's the value in the points?

A better strategy is to follow FT and in particular the MilageRun Deals forum as they'll often highlight fare sales to popular destinations worldwide. Lately we've been seeing flights to Europe in the $400s USD and to Asia in the $500-$600s USD which I suspect would be better value than if you were to use your purchased miles on a redemption. So long as you're flexible to where you want to go and when you want to go you'll always get a great deal (might take a lot of researching to find the sweet spot but can be done). Personally, I have a paid subscription to Scott's Cheap Flights (there are many others) which every day sends out fare deals from my home city. As a retiree you'll have the flexibility to travel on the drop of a hat if there's a great deal out there.

Keep in mind that airfare is only a portion of travel spend. Lodging is another sizeable expense which can often times be more than the airfare which airline miles generally won't help you with. As retirees you'll likely need to purchase travel insurance ($100s annually) since most credit card insurance programs conk out after 65 years of age. In addition you need to set aside an allowance for day-to-day spend which in many locations can be non-trivial (i.e. a Whopper combo is $15 USD in Switzerland). Ideally you want to take all of that into account as you make the booking (which you'll be able to do as a retiree) travelling to exotic destinations during low periods where both airfare and hotels are cheap.

I don't want to discourage anyone from travelling but we must all be honest with ourselves before we go out on a trip. The fact is travel ain't free regardless of what program you're enrolled in and how you use your miles - there will always be some cost above and beyond your typical day to day spend. Always assume and take that into account so you don't arrive back relaxed from a trip only to open a large credit card bill for expenses you failed to take into account from the get go. That being said, I travel a lot on points and paid tickets and have been judicious on where and how I spend my travel dollars to squeeze the most value out of the experience.

As others have noted many credit cards would allow you to rack up the miles and hotel points very quickly. Between sign up bonuses and credit card spend I've racked up around 121,500 Aeroplan points and around 60,000 British Airways Avios and another 25,000 SPG points (good for a week's stay at a Sheraton hotel in many locations). Many of these cards allow you to collect bonus miles (i.e. AmEx PRG earns 3 miles per $1 spent with airlines which IMHO is icing on the cake - what's better than being reward by your credit card for doing the things you love?). The key for me is to put literally everything I can on credit cards which is also a heck of a lot safer than debit cards or cash since there 0 liability. Even a $2 coffee I'll tap my card so I can earn those valuable points.

Hope that helps.

Safe Travels,

James

Earn and burn is the only thing you should be doing with points.

I can't add much more than my general agreement with what others have said.

Ditto. I accumulated a couple of million miles - mostly AA, a lot of DL, a few others here and there - when I flew a lot for work and didn't travel a whole lot otherwise. I still have a bunch, but they're not worth what they were when I got them. I never bought miles; in retrospect, that was even wiser than I thought it was at the time. It doesn't bother me a whole lot that my miles are worth less than they once were, I have bigger things to worry about, but it's a fact that they are.

I wanted to mention that there are other alternatives to making sure that you have funds in retirement for travel. People have mentioned investments, but I also wanted to bring up the idea of debt reduction. The most stable retirees I know are those without debt. They have more freedom with how they use their money.

One other idea is to start a special savings or investment account for travel. Put a budgeted monthly amount into this account. You could have quite the travel nest egg after 14 years.

My final point is to make sure that you strike a balance between always putting things off because you are planning for a future trip, a future (fill in the blank) and taking the time to enjoy the moments now. No one knows what the future holds. You don't want to enter retirement without any preparations, but you don't want to put your life on hold for 14 years either.

Spending miles in a reasonable amount of time after you accumulate them makes sense on several levels.