We’ve joked for years that frequent flyer programs could be the “IRA of Travel” for millions of members seeking awards and recognition into their Golden Years. Well, how is your savings plan going?

A 2002 survey conducted by the American Savings Education Council found that only about one-third of all workers say they have tried to figure the amount of income they will need for their retirement years.

And that’s just money — you know, small things, like housing, food, clothes — life’s little luxuries. What about travel? More specifically, how many have taken the time to calculate the number of miles and points it will take to get them where they want to go during their golden years? Chances are, not many. Why don’t more people plan ahead for retirement?

“It’s because they’re using everything they’ve got just to finance their current lifestyles — there’s nothing left to save,” says Kirby Zeller, a retirement planning specialist at Zeller & Associates in Colorado Springs.

Zeller says that most of his clients walk through his doors for the first time when they’re past the age of 45. Many don’t get the retirement wake-up call until age 50-55, leaving just 10 years to plan. By that point, money’s tight, to say nothing of miles.

In determining what his clients need, Zeller uses a variety of formulas, but the overriding factor is that to continue to live the lifestyle to which they’re accustomed, people will need to have at least 80 percent of their current income in retirement. A desire to travel ups the ante considerably.

“Everybody wants to travel when they retire,” said Zeller. “But if someone says to me, ‘I want to travel,’ I won’t use the 80-percent figure. I’ll use 100 percent.”

The lesson is clear: Travel can take a significant bite out of your retirement nest egg. If you can find a way to use your miles and points to do it for free, you’ll not only sacrifice less in your current retirement preparations, but you’ll have more to subsidize your lifestyle once you’re there.

A Starting Point
Before you can determine your retirement needs, you have to estimate when you’d like to retire. How many years until that glorious day when the alarm clock goes to the city dump and shaving becomes an elective? According to the U.S. government, even though the “official” retirement age is 65, most people retire around 62.

Of course, deciding at what age you plan to retire only provides a launching point from which to calculate your retirement span. Determining the other, much less-pleasant part of the equation, requires you figure out your life expectancy. The government estimates that you won’t slip this mortal coil until around age 77, but most experts agree that with an aging baby-boomer population, life expectancy will continue to grow. Be optimistic, but be realistic, and hope your miles run out before you do.

A life expectancy of 77, minus a retirement age of 62, sets down a rough framework — the average retirement is going to run about 12-17 years.

Now, how long do you have to prepare?

We took a look at our readership demographics and found that the average Inside Flyer reader is 42 years young. That would mean that most of you reading this article right now have approximately 20 years left to save. Of course, some will have more time, and some less, and we’ll address those situations in this article, but for the sake of manageability, we’ll assume an earning period of 20 years.

What Are Your Needs?
How do you expect you’ll travel in your golden years? Will you take your spouse to exotic ports of call, circumnavigating the globe twice a year? Or will you spend some quiet time at home, traveling to visit your children and grandchildren, or flying them in to visit you?

Once you have a general idea, it’s really just simple arithmetic. Two domestic roundtrips per year, times 20 years, means you’ll need to have a million miles socked away. A more generous travel allowance — say, 200,000 miles a year — will cost 4 million miles.

Naturally, you’ll want to subtract any expected earning during your retirement. On the low end, let’s say this is about 13,000 miles a year (260,000 miles for 20 years). Subtract that from your total “need,” and you have a ballpark figure.

What Are You Earning Now?
The average Inside Flyer reader takes 32.1 domestic trips per year. Assuming that the average domestic roundtrip is 1,400 miles (a roundtrip between New York and Chicago), that adds up to approximately 44,940 miles per year. Inside Flyer readers also take about 5.4 international trips per year. Assuming the average international roundtrip is 8,910 miles (the average of Los Angeles-Tokyo and New York-London), program members will earn 48,114 miles a year from those trips.

On the hotel side of things, our readers average about 57.1 nights per year. All told, (averaging Hilton and Hyatt) you’re looking at 400 miles per night. That’s 22,840 miles per year. Of course, at 57.1 nights per year, you’re probably elite, in which case a 25-percent bonus gets 28,550 a year, and a 50-percent bonus gets 34,260 miles a year.

Car rentals, at a mile a dollar, earn about 1,050 miles per year (21 rentals — again, the average for our readers).

Also, most frequent flyers have a mileage earning credit card or two. If we assume that they put $7,500 a year on their cards (based on 1.4 trillion in credit card purchases in 2002, divided by 185 million credit card holders in the United States), that adds up to 7,500 miles.

In total, then, a quintessential frequent flyer will rack up about 124,444 miles in a given year — a hefty sum, indeed. Translated over a 20 year period, that comes to a grand total of 2,488,880 miles.

But remember — just as with finances, the amount you spend each year will dramatically impact your nest egg. Depending on how long you have until your retirement, you may want to reconsider that big annual award you treat yourself to. Don’t feel like you need to out-miser Ebenezer Scrooge, though. If your earning potential roughly mirrors the above figures, you can spend half a million miles in your remaining “earning” years and still have enough for three or four domestic roundtrips every year for 20 years.

What Should You Do?
As with financial investing, the earlier you get started, the better off you’ll be. Like all strategies, how you plan will depend on many factors, such as your tolerance for risk (award redemption rates might rise, for example), your current “mileage bank” situation and your knowledge of how to make miles and points stretch. Here are three approaches to consider.

The Conservative Approach
If your ability to earn miles and points is secure and stable, you could tolerate awards increasing for redemption purposes by 15 percent and your award saving timeframe is 10 or more years, you may want to consider a conservative plan.

It’s likely you can take a less aggressive approach to saving, as you will have more time to ride out any temporary changes in the programs you belong to. This is the smartest move for those farthest from retirement. You’ll end up spending less, and won’t necessarily need to spend your business-travel career waiting on the edge of your seat for just the right bonuses to pop up.

Spending on your mileage-earning credit card need not be unusual — your normal spending habits should, over time, add up.

As for elite status — it’s great to have, and if you want to knock yourself out to re-qualify every year, go for it. But remember, if you’re flying 100,000 miles a year, you’ll be lifetime silver or gold in 10 years. That will earn you a healthy bonus over the remainder of your career.

The Aggressive Approach
If your ability to earn miles and points is somewhat insecure and unstable, you could only tolerate awards increasing for redemption purposes by five percent and your award saving time frame is between two and five years, you’ll need to get aggressive.

Historically, frequent flyers have taken a laissez-faire approach to saving for retirement years — they use their miles and points as they earn them in an attempt to avoid the pitfalls of a volatile and changing travel industry. With members earning miles and points longer, however, this conservative approach may not grow savings enough to provide adequate retirement awards in later years. This is often regarded as the “Never redeem tomorrow what you can redeem today” philosophy, and it leaves you with nothing in the long run.

One tip is to get creative with your credit card. Talk to your auto dealer, for instance, and see if he or she is amenable to putting that new Lexus on your Visa. Some have even put their children’s college tuition on their cards.

If you’re trying to earn in a hurry, elite status can be a huge plus. Some airlines and hotels will sell elite status. Earlier this year, for example, American AAdvantage was allowing its Gold and Platinum members the opportunity to pay $395 or $595 to maintain their Gold or Platinum status. Priority Club is currently offering Gold status for $50. In any case, end-of-year mileage runs to re-qualify might ultimately be worth the bonuses.

Pay attention to bonus promotions. Be it in these pages or on the Internet, use the wide variety of resources available to keep you informed about an extra few miles here and there.

Finally, stop burning your miles. Remember that the trip or upgrade you take now is one you will not be able to take later.

The Active Approach
If your ability to earn miles and points is totally within your control, you could tolerate awards increasing for redemption purposes by 10 percent and your award saving timeframe is between five and 10 years, an active (not too miserly, and not too prodigal) approach may suit you.

The active approach employs your skills as a member who knows when to go for the bonus and when not to play the game. You are savvy enough and have both the control and time to fine-tune your award retirement portfolio to fit your goals and your risk tolerance.

Consider allocating some portion of your current miles and points to an award “savings” account, for without these savings you could be left without enough awards to sustain your retirement. Your award strategy needs to balance both your need for long-term award savings along with your tolerance for short-term redemption.

The average Inside Flyer reader is already an elite-level flyer, so bonuses are adding up. Keep tabs on bonus promotions — often you’ll see transfer offers between credit cards and airline programs that can add a full 20 percent to your balance. Spend on your credit card wisely — use it for business expenses, for example, that can be reimbursed immediately, and pay your balance monthly. There is far less need for this flyer to buy a second house with his MasterCard — don’t worry too much about the “big score.”

The Secret To It All
Lifetime elite status. Doesn’t it just sound great?

Many major airlines offer some form of lifetime elite status, usually for customers who have earned over a million flight miles. The notable exceptions are Continental OnePass, Northwest WorldPerks and US Airways Dividend Miles. If you want to focus on one program (and you should), you may want to keep this in mind.

The benefits? Obviously, as you shift from business travel to leisure travel, your willingness to engage in airport shenanigans will wane considerably. You’ll want the travel experience itself to be part of the fun. Perks like lounge access, priority check-in and boarding will add to your experience.

And you’ll never have to worry about re-qualifying again. No need for last minute mileage runs in December, for example.

United’s lifetime plan may be the most generous. Once you reach 1 million miles, you become Premier Executive for life, with a 100-percent mileage bonus on paid flight miles. That same million miles with Delta earns lifetime Silver Medallion status, which has some nice perks, but only earns a 25-percent mileage bonus. To get the full 100-percent bonus with Delta, you’ll need lifetime Platinum Medallion status, which isn’t achieved until you accumulate 4 million miles.

For all the benefits lifetime elite status will provide throughout your retirement, it is really the benefits it can provide here and now that make it so valuable.

Elite members, after all, receive mileage-earning bonuses every time they fly. And over time, that 25- or 50-percent extra will add up.

For example, the 44,940 miles per year that the average reader earns in domestic travel becomes 56,175 miles with a 25-percent bonus. At Platinum-level the amount doubles, earning a cool 89,880 miles in a year. All told, the 124,444 miles per year that a “regular” member would earn become 153,418 and 228,918 miles a year for Gold and Platinum-level members, respectively.

Translated over a 20-year earning period, the numbers are astounding: 3,068,360 for Gold, and a whopping 4,578,360 miles for Platinum.

What About “Inflation?”
It’s certainly a concern for financial planning — in 10 years, $100,000 just ain’t gonna buy what it can now. But what about mileage?

In 10 years, will a domestic award still be available to you at an often-used level of 25,000 miles? While there has certainly been talk that the industry will raise the level for a capacity-controlled award, it hasn’t happened in the past five years, which arguably have seen the highest highs and the lowest lows in the industry’s history. With a few rare exceptions — notably “package” awards that offer travel, hotel stays, and activities — changes to award levels have been minimal.

In retrospect, the industry has had only two major changes to the most popular award levels over the 22 years of frequent flyer programs. In 1988, major programs introduced a capacity-controlled award at 20,000 miles (the previous average for any coach-class award was 40,000 miles). And in 1995, major programs moved to the current 25,000-mile average for controlled awards.

Our guess is that this will remain the status quo for the next 10 years. Even those programs who have quite obviously been trying to alleviate some of their mileage “debt” have approached it not by raising award levels, but by reducing earning ability. If, and we stress “if,” there is a trend toward “devaluation” you can expect it will be in the form of reduced earning for cheaper fares, ala Delta.

Of course, those of you who aspire for the front cabin have seen a number of changes to more expensive awards for business- and first-class travel. While that has been painful for many of you, take comfort in knowing that at least these changes took place in your mileage earning years, rather than your retirement years.

Where To Retire
According to the U.S. Department of Health and Human Services Administration on Aging, 73 percent of older Americans own their homes free and clear — that speaks volumes for the desire to stay at home. And if that’s your plan, stick with it. By now, you’ve probably figured out the major obstacles and subtle nuances to frequent travel from your local airport.

Moving to the sun? Many of those with the means to do so choose to live their golden years someplace where they won’t have to deal with Lakeshore Drive in January. If you’re thinking of moving to a popular retirement destination like Florida or Arizona, go nuts: But remember, busy airports can mean limited capacity for award travelers.

Savvy frequent flyers know that awards to and from secondary locations are generally easier to pin down than well-traveled routes. Seats on a plane from Tucson are probably more readily available than seats from Phoenix. Want to get out of Orlando? Good luck. So does every tired mouseketeer on their way home to Des Moines.

And though it seems obvious, here’s a little reminder: Be sure your preferred airline provides service to your local airport. You might be surprised how many folks end up with thousands of unusable miles, simply because they can’t get on the right plane. Also, don’t rely on alliances — they’re often fleeting at best. If you’re counting on being able to use your United miles on US Airways 20 years from now, think again.

Diversifying
What about airlines going belly-up? It happens. Not lately, but it happens. Consequently, you don’t want to put all your eggs in one basket.

Clearly, one of your baskets will be larger than the others. You’ll fly on all kinds of airlines in your career, and it’s wise to sock away as many as you can in all those programs. But you will be focusing on one program, so what to do with those miles should things turn badly for the airline?

Put simply: If you’re worried about business failures, do convert your miles into hotel points (when was the last time you saw a hotel chain go out of business?). Don’t convert your hotel points into miles until you’re ready to use them. And remember that in the absence of bonuses, your miles will generally lose some value in a transfer.

And here’s a tip: Remember that right now, you’re traveling on your company’s dime. You will never have the points or miles earning power from hotels you have now again. Hotel points, unlike airline miles, are strictly based on the amount of money you spend.

Death
Hardly a pleasant topic, but one of interest to those travelers who want to look out for their families. What happens to your miles when you die?

You may have noticed the fine print of nearly every frequent flyer program clearly states that miles expire upon the death of the member. For example, Northwest’s WorldPerks rules ominously state: “Accrued mileage credit and award certificates and award tickets do not constitute property of the member. Neither accrued mileage, award certificates nor tickets are transferable by the member upon death, as part of a domestic relations matter, or otherwise.”

The truth of the matter is that, handled properly, your miles will keep bringing dividends to your loved ones well after you’re gone.

The airlines have a certain loyalty to their best customers, even once they’ve passed, but more importantly, they understand that the “bad press” associated with refusing to transfer miles to a distraught family member is hardly worth the effort.

To ensure the proper handling of your miles, clearly stipulate in your will the name of the person you wish to inherit them, your account number and PIN. Be sure to have your intended beneficiary open an account with the program now — it will be far less of a headache for the program to simply transfer miles to another account.

Enjoy Your Miles
As retirement approaches, there are certainly more pressing issues to worry about than your mileage balance, but you should keep in mind that free travel will significantly reduce your needs.

“Time, money and compound interest are on your side,” Zeller tells his clients. “The more you have of each, the better off you are.”

Wise words, but we’d suggest that miles belong in that list.