While I usually write about strength and sport training topics, today I’m going to venture off a bit and address a topic that I believe is very important to my fellow trainers. I’ve been lucky enough to have met many personal trainers in the past year at local and top levels. During conversation, I’m always surprised to find that most of them don’t have any sort of retirement plan. I must confess, currently I don’t either, but it’s something that’s always on my mind.
As a former high school mathematics teacher, this topic is of great concern to me. When you work a government job, it’s not just about the money you make during your years working, it’s also about the money you make when you retire.
Example 1 – Firefighter
A chief of a local fire department started working 32 years ago as a firefighter. His starting salary was $20,000 per year. Over the years he rose through the ranks from firefighter to captain, captain to battalion chief, and battalion chief to chief. He currently makes $150,000 per year. His average salary over the 32 years is $70,000 per year. During his career, he made $2.24 million dollars.
Since he worked for 32 years, his pension is 80% of his base salary averaged out over his last three years of work. FYI, if you put in 20 years you get 50% and 75% for putting in 30 years; it rises as more years of service are reached and tops out at 80%. Many individuals in the fire service will work a ton of overtime during their last three years to boost their pensions.
Let’s say that this particular chief started out as a firefighter at age 23, retired at age 55, and lives until he’s 85. During his 30 years of retirement, he makes $120,000 per year in pension. This equates to $3.6 million dollars. So he made $2.24 million while working and $3.6 million while retired for a total of $5.84 million. Of course, I’m ignoring what Uncle Sam takes out but you get the point.
He made 61% more money from his pension than he did from his years of service.
Now, there’s more to retirement than just pensions. There’s social security, savings accounts, 401(k)’s and 403(b)’s, IRA’s and Roth IRA’s, stocks, bonds, CD’s, employer matching programs, etc.
Why is this important for trainers?
We are responsible for our own retirement. Most of us aren’t paying into social security and won’t have a pension.
Example 2 – Typical Personal Trainer
Let’s say a personal trainer makes $60,000 per year. His earnings fluctuate slightly over the years but stay relatively constant. He spend money carelessly, parties relentlessly, and doesn’t save anything. He needs to keep working until he dies in order to continue providing for himself. At sixty years of age he suddenly realizes that nobody wants to hire an old-ass trainer and nobody wants to listen to what was popular back in the 1980’s. This trainer started at age 25 and worked until he was 60 and made $2.1 million over the course of his career…a far cry from the $5.84 million earned by the individual in the fire service.
Even worse, now he’s living in a van down by the river, he has old balls, and nobody wants to talk to him. His desperate attempt at a motivational speaking gig is ill-fated and he ends up succumbing to a drug addiction.
Example 3 – Smart Personal Trainer
Another personal trainer also starts at age 25, works til he’s 60, and makes an average of $60,000 per year (we could speculate that he keeps on learning, attends seminars, networks, and keeps earning more money over the years but that’s not the point). He only spends $36,000 per year and saves the rest. He puts some into savings, a lot into an IRA, and a little into the stock market. Since he was so fit and responsible, he was able to find himself a beautiful wife who also worked and earned income. At age 60, they’ve paid off their mortgage, saved enough to be able to retire, and can spend their days kicking back on the hammock while sipping on coronas.
Bottom line – the best time to start thinking about your retirement is NOW!