As a massage therapist, you work hard for your money. The smart thing to do is to put some of that money to work so you can have a secure retirement.

You’re never too young or old to start thinking about retirement. When you’re young, it’s actually quite easy to create a plan for retirement. As you age, having a solid retirement savings plan becomes more critical.

Save for Retirement

The first key to having a solid retirement plan is to have a goal amount and date. When would you like to retire? 65? 62? Sooner? Be realistic. If you are 30 years old making $45,000 a year and would like to retire at 40, even if you put away half of your after-tax income at a 10% growth rate, you will not have enough to live out your life expectancy at any level of comfort.

Don’t let that discourage you. If you start putting just $305 a month at 30 years old into a stock index fund, by the time you are 65 you will have just over one million dollars saved.

Set aside more, and it will grow exponentially with the increase. There is a powerful calculator at on which you can change the contribution amount and length to see the variances to make the best decision for you.

Instead of coming up with an arbitrary number, look at the total of how much you will need to live the way you would like through your life expectancy and beyond. You might be surprised how low the required amount might be.

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How Long Will it Last?

Another useful calculator to help with this is at CalcXML for determining how long a specific amount can last in retirement. An important thing to remember is that at 3% inflation, the cost of goods doubles every 20 years. The same meal eating out today at $25 would probably cost closer to $50 in 20 years.

Once you have the amount, follow the prompts to see how long a target retirement amount would last. Try different amounts until you find one that lasts well past your life expectancy. The calculator includes inflation, so the amount withdrawn increases accordingly. Combining this calculator with the previous one will help you create a realistic, achievable retirement savings goal amount.

Make Your Money Work

The next critical piece in a retirement plan is to have the money you are saving work hard for you. The way to do this is to invest.

There are so many options for investing that it can be overwhelming. You can give Uncle Louie money for his next great idea, but don’t count that as your retirement plan. Uncle Louie may or may not come through — and you probably do not want to place your ability to retire on a high-risk venture. We will focus here on stocks, bonds and mutual funds.

The stock market might seem like a high-risk venture. We all witnessed the stock market crash of 2008. But is it truly a risky investment for retirement? When you purchase a stock, you are purchasing a piece of the company. In effect, you are becoming an owner. As an owner, you share in both the risk and the reward of how that company performs.

If the company does well, the stock price rises. With the increase in price, the amount you can get for selling that stock goes up with it. Growth in stock price is one way you make money on a stock. Investing in growth stocks can be a crucial part of growing a retirement portfolio. Growth stocks tend to be risky. You are assuming more, considerable, risk with the hope that the stock price will keep growing to increase your retirement portfolio.

When a company becomes stable, it may decide to offer dividends. When this happens, every person holding shares is entitled to receive some of the profits of the business. Dividends are typically paid out annually or at other intervals decided by the board of directors. Dividend stocks are generally safer investments as they tend to be from mature, stable companies. Dividend stocks are often utilized after retiring, as income from dividends can provide the means for covering expenses.

Market Upturns & Downturns

There may be market downturns or upturns, but the stock market historically provides around 10% per year growth long-term.

Only if you are willing to take the time to educate yourself on the intricacies of the market and study trends and developments is it recommended to invest in individual stocks.

Even companies viewed as leaders in their industry can falter. Kodak was ubiquitous with photography; that is, until the digital era arrived. Kodak failed to innovate and is still struggling to find relevance in today’s market.

One main caveat when investing: Do not allow your emotions to guide you into bad investment decisions. It can be challenging to hold onto a stock or fund that has lost half its value with a drop in the market. However, if you have made your investment choices wisely, it is likely better to ride the dip out. You won’t actually lose money until you sell. Chances are the market, and thus your stock value, will rise again.

Mutual Funds Might be Safer

If we are not investing in individual stocks, then how are we going to use stocks in our retirement portfolio? Mutual funds can be a safer way to invest in the market without having to take on investing as a part-time job and to diversify risk.

Diversify risk? We have all heard the adage, “Don’t put all your eggs in one basket.” By investing in one stock, you are essentially putting all your eggs, money, in one basket.

Mutual funds are professionally managed portfolios of securities. The securities can be any of a variety of investment vehicles, including stocks, bonds, money market instruments, real estate, etc. Mutual funds can vary from a specific type of stock to a widely diversified portfolio. Some mutual funds focus on growth, while others focus on stability and dividends with everything in between.

What are Index Funds?

We mentioned index funds earlier. These are mutual funds that contain a wide variety of stocks from all sectors to balance out any fluctuations across the market. They take advantage of the growth in some sectors while being buffered from challenges in others. Index funds will fluctuate with the market as a whole but give you the long-term growth that typically comes with the market.

Mutual funds are a simple way to invest in stocks and other securities while letting professional analysts pick and choose the actual components of the portfolio. There is a tremendous variety of mutual funds to choose from.

Some of the criteria you might consider before searching for an appropriate mutual fund for you are growth vs. dividends, your general level of risk aversion, how long you have to grow your portfolio, and types of industries you are willing to support. That last piece is becoming more relevant as social consciousness guides more people’s choices.

For example, there are mutual funds that focus on energy stocks. Some people will not invest in many of these because they invest in companies that are heavy in fossil fuels. An alternative might be a fund that invests in solar power.

Low-Risk Bonds

Bonds are another investment vehicle to consider. While bonds can be part of a mutual fund portfolio, they are a safer instrument that you might consider purchasing directly. Bonds differ from stocks in that they do not impart ownership. They are more like a loan a company or government entity issues with a promise to pay back the person holding the bond.

Bonds usually are lower-risk investments and thus often give lower returns overall. They are great to use with a mature retirement portfolio or to diversify a growing portfolio with safer, more stable investments.

Any of the above can be invested through an IRA or individual retirement account. IRAs allow you to invest pre-tax dollars so that more of your money today can go into investment. More dollars going in equals a larger amount growing and working for you. IRAs operate similarly to employer-sponsored 401(k)s but can be invested in whether you are employed or self-employed. Tax is taken at the end at retirement when most people are in a lower tax bracket.

Take Action Now

The final key to a successful retirement savings strategy is action. None of the prior information will give you a comfortable retirement unless you put it into action.

Decide on your goals of when you will retire and with how much. Start investing in stocks, bonds, mutual funds, IRA accounts, and even a home to start building for your golden years.

This article is not intended as investment advice, as each situation is different. Once you are ready to begin, seek the advice of a qualified investment advisor.

About the Author:

Elmas Vincent is an entrepreneurial mentor, coach, consultant, speaker and trainer. He wrote this article on behalf of Southwest Institute of the Healing Arts, a school that offers training in massage, nutrition, life coaching and more.

“You Asked” provides answers to questions asked by MASSAGE Magazine’s community of massage therapists. Join our closed massage therapists’ Facebook group to participate in polls and for the opportunity to tell us what you’d like to learn.