You hope to have a long, happy, healthy massage career; but have you given serious thought to what will happen when you are ready to retire?
If you’re an employee, you may already have an employer-sponsored retirement savings plan available, but if you work independently, the responsibility for your retirement fund lies with you.
Ultimately, your retirement income depends on the money you save over the years you work—but saving is only the beginning. These tips from life coach and Southwest Institute of Healing Arts educator Suzie McLaughlin, LMT, C-MLDT, LC, will help you set up a plan that will work for you now, as well as pay off once you reach retirement age. (Read “A Massage Therapist’s Guide to Basic Retirement Planning.”)
1. Straighten Out Your Money Beliefs
Some people unconsciously stop themselves from investing in their retirement because that would mean they had more than enough money. I call these types of hidden beliefs money monsters.
Do you think of people with money, for example, as filthy rich, penny pinchers, or greedy money-grubbers?
These thoughts do not fit who you feel you are, so you may experience a powerful subconscious conflict when it comes to saving. Journal about your money beliefs and see if they color how you work with money as a tool. Reword any phrases you feel do not serve you and your goal to save for retirement.
2. Save Some Money
Once in a while, you may think, “I need to start a retirement account,” but then put it to the back of your mind. One easy way to get started toward retirement is to create mindful spending habits, such as:
Open a “me” savings account.
Download the app for your account onto your smartphone.
Every time you decide against making an impulse purchase, simply move that amount over to your “me” account.
Prepare to be astounded at the amount you see in that account at the end of a month.
3. Get Comfortable with Financial-Speak
It is difficult to feel confident about investing in a retirement account if you don’t understand how it works. Financial language can be intimidating, but becoming familiar with it will boost your confidence and help you make decisions that benefit you.
YouTube.com has some good videos explaining financial terms. Also try Googling some retirement-related terms such as earned income, mutual fund and required minimum distribution.
For example, if you Google “individual retirement account,” you may be surprised to learn that it only takes $1,000 to start an individual retirement account (IRA).
4. Pick an Individual Retirement Account (IRA)
An individual retirement account (IRA) is a tax-advantaged bank account designed to help individuals save for retirement. There are eleven types of IRAs—but for simplicity, let’s stick to the types best for entrepreneurs.
A traditional IRA is for you if you:
- Have earned income;
- Expect to be in a lower tax bracket when you retire;
- Want to defer paying taxes on your savings until you retire and start withdrawing them;
- Would benefit from an immediate federal income tax deduction;
- Don’t expect you’ll need to take money out of the IRA until retirement, after age 59.5.
A Roth IRA is for you if you:
- Have earned income;
- Expect to be in a higher tax bracket when you retire (maybe from an inheritance?);
- Want to pay taxes on your savings now and get federal-tax-free distributions in the future;
- Don’t want to be subject to required minimum distributions from your savings;
- Want the flexibility to withdraw at any time, even before retirement.
5. Ask Questions
You will have a long-term working relationship with the company you use for your IRA. Get to know at least three different investment firms to find out which is the best fit; you’ll need enough information to decide whether the company has the right mix of funds and customer service for you.
Put together a few questions to ask the firms. Pay attention to how they treat you and how easy they are to understand. Here are some sample questions for the financial advisor you speak with:
- How do you charge for your services—and how much?
- What types of clients do you specialize in?
- Will I be working with only you or with a team?
6. Start Now
Even $10 a week will build over time. It is better to start now with a small amount instead of starting someday and then have to catch up.
Saving builds upon itself. Consider this:
You can invest as much as $5,500 a year in your IRA, meaning you can save $110,000 in 20 years. You need to start that account with a deposit of $1,000. That leaves a limit of $4,500 more you can add by the end of the year.
To make things simple, let’s say you want to invest $4,000 more. That is about $77 per week. In my world, that is one massage. Could you afford to put one massage a week toward your retirement? That’s something to think about.
About the Author
Suzie McLaughlin, LMT, C-MLDT, is a life coach and instructor at Southwest Institute of Healing Arts where she teaches a variety of courses; she also assisted in the development of the school’s medical massage certificate program.