Even though you love what you do, there will inevitably come a day when you’ll be ready to retire. No matter how far away that day is, retirement planning for fitness business owners requires a game plan, saving and investing now. To help you create or refine your retirement plan, this post covers the basics for fitness business owners.
Estimate Your Required Monthly Income
What will it take for you to live comfortably once you’re no longer working? That’s a difficult but important question to consider. Even though some experts suggest saving a certain percent of your current monthly income in preparation for retirement, a better way to plan is by considering the lifestyle you want to have when you retire.
For instance, if you want to do a significant amount of traveling or desire a luxurious lifestyle, you’ll need more money saved than if you already own your retirement home and plan to live modestly. Either way, with backward planning, you can create an estimate of your monthly expenses and then prepare for how you’ll get there.
Know Your Savings and Investment Options
Everyone should have a savings account for unexpected expenses. But when preparing for retirement, investments like mutual funds, exchange-traded funds, CDs and bonds are far better options. While current saving account interest rates average about 1.9%- 2.30%, average annual returns for a balanced investment portfolio range between 5.96% and 9.67%.
Start Investing as Early as Possible
Retirement planning for fitness business owners should start ASAP. Time makes all the difference when it comes to investments. Since markets are volatile, daily fluctuations can cause your investment to grow or shrink significantly. But over a 10-20-year horizon, the variations diminish such that investments steadily and consistently grow. To put this into perspective, over the last century, the average annual growth of the stock market is 10%.
Not only that but as your investment builds, compounding growth kicks in. This means the money you make with your estimated average 5.96% to 9.67% annual return is reinvested, which generates even more growth. From there, interest continues to build on your principal investment, and the annual return is calculated on that ever-increasing sum of money.
Always Continue Learning
Finally, the most successful savers and investors are lifelong learners. Whether you listen to Bloomberg on XM on the way into your gym, check the CNBC Money app or read the Motley Fool, learning about the financial markets will make a massive difference in the number of assets you have upon retirement.
Even though retirement seems far away, it’s never too soon to start planning for it. A little saved or invested today will grow exponentially and ensure you enjoy a comfortable retirement.
This content is not intended to be financial advice or take the place of certified financial advisories.
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