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Watch "Understanding Mutual Funds" keep up with inflation. You want to invest it in a way that earns interest and helps your money grow. What rate of return should you plan on? You really can't plan on a specific number (sorry!), but you can use historical information to get a reasonable estimate. Many experts suggest a range of 7–9 percent. To calculate how much you need to be saving, you could do a bunch of fancy math, or you could use one of the hundreds of tools available to help you calculate it. Our favorite is the Compound Interest Calculator from Investor.gov. To find it, do an online search for "investor.gov compound interest calculator." Plug in your information and see where you end up. For example, let's say you are starting at zero, you would like to reach financial independence in 20 years, and you think you can save $500/month. You would enter "0" as the initial amount, $500 as the monthly amount, 8 percent as the rate of return, and possibly a variation of 1 percent to see other scenarios. You will end up with a final number of $274,571.79. Now you can adjust the numbers to see different results. If you increase the monthly amount to $700, you end up with $384,400.50. If you then increase the time to 25 years, you get $614,089.90. This will help you visualize different scenarios. What about social security? This is a whole can of worms—and there are differences of opinion on what social security will look like in the future—so we say just plan without it, and then if it's available to you at retirement, you won't be mad about having extra money. WHAT TOOLS TO USE Where do you put this money you save? While the typical corporate retirement plans are not available to you (unless you work as an employee at a corporate massage entity), you do have some great options. We won't be digging into the nitty- gritty details of each option in this article, but we recommend reviewing our other resource on this topic titled "The Definitive Retirement Plan for MTs" available in the May/June 2018 issue of Massage & Bodywork magazine (page 84) in which we dive deeper into the details of each account type. There is also a webinar ("Saving for Retirement as a Massage Therapist") on the topic in the ABMP Education Center (www.abmp.com/ learn/course/saving-retirement-massage- therapist). In general, as an independent massage therapist, we recommend considering three types of retirement/savings accounts: the IRA (and Roth IRA), the Solo 401(k), and the taxable brokerage account. Also, keep in mind that you can mix and match, as well as set up one or more types of accounts to use in tandem. IRA For the most part, the IRA (individual retirement arrangement) is going to be your first go-to. And specifically, the Roth IRA is pretty popular. An IRA allows you to save money in a way that is shielded from taxes. If you use a traditional IRA, the money you save is tax deductible, but it will be taxed when you withdraw it at retirement. A Roth IRA is the opposite. The money you save comes with a tax deduction, but it grows tax-free and is tax-free at retirement. This is why many people love the Roth IRA, especially as a long-term savings vehicle. There are contribution limitations on the IRA, so be aware of the rules that apply in the current year. C h e c k o u t A B M P P o c k e t P a t h o l o g y a t w w w. a b m p . c o m / a b m p - p o c k e t - p a t h o l o g y - a p p . 19 The goal is to have enough money to reach financial independence at an age that is comfortable for you and maintains a reasonable lifestyle. So how do we calculate this? First, be aware that we are entering some areas of controversy. Retirement planning is not an exact science, and there are a number of unpredictable variables that exist. That said, the following basic principles are meant to give you a starting point and are not to be taken as specific financial advice. Many experts recommend we use the "four percent rule" when calculating income at retirement. This is not a one-size-fits-all rule, but it is a reasonable baseline for doing some planning. It simply means that you would expect to withdraw 4 percent of your investment balance for income while your investments are (in theory) earning 4 percent interest on average, thus never depleting your balance. We encourage you to search the term "retirement four percent rule" online for more information on the pros and cons of this approach, as well as caveats and factors for consideration. Now, let's decide on a monthly income that would achieve the lifestyle you want. Let's say it's $4,000/month. How much money do we need to save to get there? We would multiply $4,000 x 12 for an annual income of $48,000. Next, we would divide $48,000 by 0.04 (four percent), which gives us $1.2 million. This tells us that we need $1.2 million to achieve financial independence. That sounds like a lot of money! How do we get there? Answer: compound interest. Saving $1.2 million is a pretty tall order, but the good news is you have some help in the form of interest on your money. We'll get to the specifics in a bit. When saving for financial independence, you generally don't want to just plunk money into a bank account. This won't even