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A B M P m e m b e r s e a r n F R E E C E a t w w w. a b m p . c o m / c e b y r e a d i n g M a s s a g e & B o d y w o r k m a g a z i n e 15 RETIREMENT Regarding Allissa Haines's article "The Defi nitive Retirement Plan for MTs" [May/June 2018, page 84], fi rst, kudos for addressing this critically important topic. For those feeling overwhelmed, however, I'd like to suggest that much of the discussion about IRAs/40l(k)s and Morningstar ratings is really just noise. For those who are complete newcomers to saving for retirement, I'd recommend just focusing on three basic points. (1) You must save for retirement in order to retire; what type of account (IRA, etc.) you save in is secondary. You can learn (for free!) about various retirement account options by calling a discount brokerage, such as Vanguard, Fidelity, or T. Rowe Price. They have fantastic customer service representatives who can help you fi gure out which option will work best for your situation. However, you do not need a retirement account to save for retirement. You just need to save. (2) Your money will not grow (or even keep up with infl ation) unless you invest it in something other than cash; investing in the stock market is, unfortunately, a necessity. However, a total stock market index fund makes it easy to check all the "good investment strategy" boxes at once: fully diversifi ed (to manage risk), very low cost, and (relatively) easy to understand. You can—and should!—learn more about setting up a basic investment portfolio by searching for "index fund portfolios" or "getting started with index funds." (3) If you want fi nancial advice tailored to your situation, look for a fee-only fi nancial planner who will give you advice in exchange for a fl at or hourly rate. Any other type of advisor makes money based on what you invest in or how often you invest, depending on their commission structure; it can be hard to know whether this type of advisor is acting in your best interest or theirs, so steering clear is easier than trying to fi gure out their motives. Thank you ABMP, and Allissa, for starting an important discussion! ALLISON CARMODY ARLINGTON, VIRGINIA Author response Thank you for the thoughtful comment on our retirement article! We would love to address some of your points. First, you wrote, "Much of the discussion about IR As/40l(k)s and Morningstar ratings is really just noise." We would respectfully disagree with that statement. Calling it noise diminishes the importance of these details that are, in reality, important details. Choosing between funds and retirement account types can make a difference of thousands, tens of thousands, or even hundreds of thousands of dollars. We would not call that noise. While you are correct that you do not need a retirement account to save for retirement, ignoring the tax advantages of the account types we discussed can dramatically limit your potential to save. We don't disagree with your statement of "You can learn ( for free!) about various retirement account options by calling a discount brokerage, such as Vanguard, Fidelity, or T. Rowe Price. They have fantastic customer service representatives who can help you fi gure out which option will work best for your situation." You can certainly do this and learn a lot about your options. The companies you listed are all legitimate companies. Some people are comfortable doing this while others prefer a more hands-on approach and coaching from a fi nancial advisor. There is no right or wrong. The next section of your comment seems to be very biased toward index funds. While there is nothing wrong with index funds, your comment implies that this is the "best way to go" and that it covers all the bases. It also implies that low fees are the most important thing. We disagree with both of those assertions. If you do some research and analyze mutual funds from various fund families, you will be able to fi nd mutual funds that have outperformed the S&P 500 over a period of time (past 10 years, 20 years, or longer) even with fees included. While the fees can be higher with mutual funds, the historical performance has clearly outpaced the fees and would have made more money over the long term. Passive management with index funds is a popular talking point but in reality, it is a fl awed assumption that index funds are always the best way to go and they are certainly not the best choice for everybody. Finally, you discuss fi nancial advisors and the different compensation models and state "steering clear is easier than trying to fi gure out their motives" when referring to commission- based advisors. We fi nd this rather pessimistic. Every profession has people who can be unethical and fi nancial services is no exception. However, this does not mean you should assume that commission-based advisors are unethical. You would want to choose someone the same way you would choose any other professional. Get a referral, ask them questions, and get to know how they work. Ask about the reasons behind their recommendations so you can decide for yourself. There is no right or wrong model for how an advisor gets paid and there are great advisors in all of these categories. We hope this is helpful and again, thank you for your thoughtful comment and for being a reader! ALLISSA HAINES AND MICHAEL REYNOLDS Thankfully, financial planning doesn't have to be scary, and getting your retirement plan figured out is really empowering. Building a satisfying, sustaining massage practice includes planning for your own retirement. It's a step that many of us overlook and can lead to anxiety now and financial instability later. Let's break down the options for your retirement planning in plain, simple terms that will make it easier for you to understand how to start saving for your retirement without feeling lost and confused. HOW MUCH DO I NEED TO SAVE? This is the most basic question: How much do I need? It seems like a simple question, but a lot of people don't even know how much they should be saving. It helps to work backward to figure it out. What do you want your income to be when you retire? Let's pick a number like $50,000/year just to keep it simple. If you would like to generate that much income at retirement (meaning, without working) you will need enough money so that you make that much off the interest. The usual figure to project interest-earned income is 4 percent. This means that whatever big chunk of money you have saved at retirement, you would be living off 4 percent of that per year. Why 4 percent? It's generally regarded as a "reasonable" figure based on the historical performance of the stock market. It's also a bit controversial, so you may read other opinions on this. Surprise! People like to argue about money. Here's the thing: don't get too hung up on it. These are just guidelines to get you started saving money. If you're off by a percent or two it's not the end of the world. Missing the mark a little is better than doing nothing at all. How much money do you need to save to get that retirement income from interest? You can do some math to figure it out, but don't bother. There are a million websites out there that will do the calculations for you. My favorite is the The Definitive Retirement Plan for MTs By Allissa Haines When most people think of the phrase retirement planning, they conjure up images of old guys in suits peering over their glasses at you, throwing out financial jargon designed to make you feel dumb. It's true, retirement planning isn't glamorous. There's a learning curve, and it takes a little effort. You know what is glamorous? Being able to live, eat, and play wherever you want when you retire. Not having to eat ramen off a hot plate while living in your favorite niece's basement is pretty nice too. RE ADER FORUM