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December 2010

A Fitness Professional’s Guide to Retirement Planning



According to the United Nations World Population Prospects Report for 2005–2010, the average lifespan for an American adult is 78.2 years. The benefit of being a fitness professional who practices what he or she preaches about exercise and healthy living is the ability to stay active and live a long life. It is very realistic that a person with an active and healthy lifestyle can continue teaching group fitness classes or delivering one-on-one training services into his or her late seventies. While the ability to work part-time during retirement is one benefit of a healthy lifestyle, it is a good idea to develop and implement a financial plan so that working during retirement is a choice and not a necessity.

If you’re like most fitness professionals, you tend to be very goal-oriented. You possess the drive to establish and achieve personal fitness goals, and make a living by helping clients learn how to set and work toward their own exercise goals. Goal setting is not only important for achieving a specific health or fitness outcome, it is a necessity for planning a productive and successful retirement. And although retirement might seem like many years off, it is critical to start retirement planning as early as possible to take advantage of the benefits of a long-term saving and investment strategy.


retire plan

Creating a Plan for Retirement

The purpose of this article is to provide an informative overview about the importance of retirement planning.  Do not consider the information in this article to be specific retirement advice, but instead a general overview of the different options available to professionals working in the fitness industry. To identify the most effective type of retirement planning for your individual needs, ACE recommends consulting with an appropriate financial professional.

The first step in creating a client’s workout program is to conduct a needs assessment of the client’s current fitness levels to determine the most effective method for designing a program for the desired exercise outcome. Retirement planning is very similar to designing an exercise program; the first step is to conduct an assessment of your current financial status and identify a specific goal for retirement. Some factors to consider when planning for retirement include:

  • What is your desired age of retirement?
  • What is your desired lifestyle in retirement? For example, do you want to be able to travel, or stay in one location and enjoy a particular area?
  • What is your desired income or cash flow?
  • What is your plan for providing health care?
  • In what type of home do you want to live?
  • Is working during retirement an option?
  • What will be your state of residence? (Some states have no income tax for residents, which make them a prime choice for retirees on a fixed income.)

Once these initial questions are answered, it is time to conduct an assessment of your current finances and determine the most effective way to save for retirement. It is a good idea to create a monthly budget of current income and expenses to identify the amount of money available for a retirement savings account. Considerations for a monthly budget include:

  • What is your net take-home income from all sources (e.g., health club employment, private clients)? This is important not only for identifying your total monthly income, but also because owners of a legal business entity have a variety of options for retirement planning that are not available to traditional employees.
  • What are your necessary monthly expenses for categories such as housing, food, transportation, communication (internet, cell phone, etc.), clothing, professional development, exercise equipment, insurance or other costs related to operating a fitness business?
  • What are your ancillary expenses for entertainment, travel or hobbies?
  • Based on the income from all sources and where it is allocated to manage expenses, how much do you have available to save for retirement?

Depending upon how you answered these questions, you might determine that you need to start looking for opportunities to increase your current income, such as taking on more clients or another class commitment. You should also look for ways to reduce your expenses. For example, spending $10/day on lunch might not seem like a big expense, but it can add up to more than $200/month (or $2,400/year). Likewise, instead of committing to a car payment of more than $400/month for a new car, consider buying a reliable used car for less money and putting the additional savings into a retirement plan. The amount available for retirement savings might not seem like much to begin with, but every little bit adds up. Stashing away an extra $200/month in a retirement savings account will result in an additional $12,000 in savings in just five years (the lifespan of a typical car loan). And that doesn’t even factor in the additional benefits of reduced tax liability, compounded interest and potential long-term capital gains. Online you will find savings calculators that can help determine the most effective amount to save given your current income level.

Options for Retirement Plans

There are a number of different options for creating a retirement plan dependent on whether your work for an employer who offers a defined contribution plan like a 401(k) or whether you operate your own business, which can qualify for a Simplified Employee Pension (SEP). These are generalized descriptions in order to provide information about questions to ask a qualified financial professional.


Named after the section of the Internal Revenue Service code that created this defined contribution savings plan, a 401(k) it is an effective solution for fitness professionals who work for a direct employer such as a health club. A 401(k) takes pre-tax income from an employee’s compensation and places it in a retirement savings account where the savings can grow tax free. One benefit of using an employer-sponsored 401(k) is that the amount saved is not taxed; taxes are not paid on the money in the account until it is withdrawn and used as income during retirement. An additional benefit of a 401(k) is that an employer may also provide matching contributions up to a predetermined amount.

Consider the following example of a fitness professional making $50,000/year working in a health club company that has a 401(k). She is training 35 sessions per week at $28/session (not counting any sales commissions or bonuses) and places 10 percent of her income in a 401(k). At this rate, she will save $5,000/year for retirement and only be taxed on $45,000 of income. Additionally, her employer contributes an additional $500/year, for a total savings of $5,500/year that is allowed to grow tax-free until retirement. There can be a downside, however, to many employer-sponsored retirement plans; specifically, a limited selection of funds to chose from and the expense or operation cost charged for managing the fund. Be sure to read the fine print and ask about the fees involved with the plan before deciding whether or not an employer-sponsored defined contribution plan is your best retirement savings option.

retire 2

Apart from a few well-defined exceptions, the money in a 401(k) cannot be withdrawn until an individual reaches 59 ½ years old. Additionally, money in a 401(k) account will continue to grow tax-free until an individual reaches 70 ½, at which point the individual must start taking withdrawals from the fund and begin paying the required income taxes.

For the current tax year of 2010, the annual contribution limit for a 401(k) plan is set at $16,500, and there is an additional “catch-up” provision allowing an extra $5,500 for individuals over 50 years old. A participant in a 401(k) will always be 100 percent vested in his or her own contributions (meaning that the money can travel with them if they leave a particular job), but the employer might require a minimum employment period before an employee is 100 percent vested in the employer’s contributions. The combination of the income tax deduction for the contributions, the ability to save money with no annual taxes on the dividends, and the extra savings from an employer if offered certainly make consideration of a 401(k) for retirement worthwhile for many fitness professionals.


To participate in a 401(k), your employer has to offer it as a benefit. Another option for retirement savings is the Individual Retirement Account (IRA), which allows an individual to establish a retirement account and contribute up to $5,000 per year or $6,000 per year if he or she is over fifty and is making “catch-up” contributions. To establish an IRA, an individual has to have a documented income stream or file jointly as part of a married couple. Like a 401(k), money deposited in an IRA is deducted from the income for the year, so contributions can be tax-free up to a certain income limit. If the trainer from the previous example decides to start an IRA account, she can contribute up to $5,000 to this account and still only be taxed on $45,000 instead of $50,000. However, other than a few well-regulated exceptions, money cannot be withdrawn until the individual is 59 ½ without incurring substantial tax penalties. Again, as is the case with a 401(k), an individual must begin withdrawing money and paying the requisite taxes when he or she reaches the age of 70 ½.

Roth IRA

Similar to an IRA, a Roth IRA allows an individual to save for retirement, but the contributions are not tax-deductible. Therefore, if the trainer in the previous examples puts $5,000 in a Roth IRA instead of an employer-sponsored 401(k) or personal IRA, she would still pay taxes on her full $50,000 salary because her contributions are not tax deductible. However, she will not have to pay taxes when she begins to withdraw the funds, nor is she required to begin withdrawing at age 70 ½. Instead, she will have the option of not drawing upon the funds until she needs the money, or even leaving the fund intact as an inheritance for her heirs.

Self-Employed or Small Business Owners

If you are self-employed or own a small business, there are several retirement-planning options available to you. Small businesses with fewer than 100 employees can offer either a Simplified Employee Pension (SEP) plan or a Savings Incentive Match Plan for Employees (SIMPLE). Both of these plans allow the small business owner to save either 25% of net earnings or $49,000 (whichever is the lesser amount) into a retirement plan and deduct that amount from taxable income. This means that an individual who runs his or her own fitness business can establish a retirement savings plan that will allow him to save up to $49,000 a year for retirement and deduct that amount from the net earnings of the business, thereby reducing the tax burden of the business. This is an excellent solution for fitness professionals who establish themselves as a sole proprietorship for the purpose of providing in-home private training or contracting with an outside facility. It is important to realize, however, that each employee is eligible for the plan and the employer must provide the same contributions as a percentage of the employee’s income. The U.S. department of Labor has information on how employers can establish pension or retirement plans at It is best to work with the appropriate financial advisor to determine the most efficient pension plan for the needs of your particular business.

The IRS also has specific rules regarding who can contribute to traditional or Roth IRAs based on certain eligibility guidelines and the taxpayer’s Modified Adjusted Gross Income (MAGI), which is calculated when filing a tax return. A qualified financial planner can provide information on how to determine the most effective retirement plan, as well as the best course of action for funding the plan.

Case Study: Aimee, ACE-certified Personal Trainer and Group Fitness Instructor

Aimee, an ACE-certified Fitness Professional from Washington, D.C., worked as a personal trainer and group fitness instructor for a large health-club company that offered a 401(k) savings plan along with $500 per year in employer matching. Aimee made a 15 percent contribution that, combined with the employer matching, has allowed her to get a jumpstart on her retirement savings. During her tenure at this company Aimee would actually turn down some in-home clients or group fitness classes at other clubs, which paid a little more per class because she was thinking long-term. “Fifteen percent of every client session or class I taught went straight into my 401(k) retirement account, which reduced my taxable income while allowing me to save for my retirement—even though it’s still more than 30 years away. If I took an in-home client or a class at another club for a little more money, I would lose the opportunity to contribute to my 401(k). This would have ultimately cost me thousands of dollars in the long run, so I turned most of them down.”

To illustrate Aimee’s point, consider the information in Table 1. A fitness professional earning $50,000 per year who saves 10 percent of her income in either a 401(k) or IRA can accumulate more than half of a million dollars in 30 years. If the same professional saves 20 percent of her $50,000 income in a 401(k), she can save more than $1 million in the same period of time. While the U.S. stock market has been wildly unpredictable over the past three years, the long-term rate of return has been consistently positive. For example, from January 1926 to December 2006, the market produced an annualized 10.15% rate of return before any taxes or other expenses; therefore, 8% is considered a reasonable number for estimating future returns based on past performances (Source: Armstrong III, F. (2009). The Retirement Challenge. FT Press: Upper Saddle River, N.J.).

Table 1: Accumulated Savings at 8% Interest
Years of Saving Amount Saved - $5,000/year ($417/month) with an 8% return Amount Saved - $10,000/year ($834/month) with an 8% return
5 $29,333


10 $72,433


15 $135,761


20 $228,810





30 $566,416


(Source: Armstrong III, F. (2009). The Retirement Challenge. FT Press: Upper Saddle River, N.J.)

The current market might seem too volatile, but over time business cycles will return to producing ongoing, consistent growth. Creating a retirement-savings plan based on long-term, consistent savings can help minimize the effects of market turmoil, while also taking advantage of dollar-cost averaging—when stock prices are up, your deposits purchase fewer shares, but if the prices fall, a greater number of shares can be purchased for the same amount. The trick to maximizing the advantage of dollar-cost averaging is to set a regular schedule of deposits (e.g., regular paycheck contributions, automatic deposits to an IRA) and stick to it.

Working with a Financial Advisor

Resources for Retirement Planning

There are numerous resources available online to help you research the most effective retirement planning for your needs. A quick internet search can find retirement calculators and a plethora of advice about different investing options. A great place to start is the Web site of the Internal Revenue Service (create link:, which outlines the tax implications of a variety of retirement options. If you who own a business and have employees, the U.S. Department of Labor’s Web site (create link: features detailed information on establishing pension plans. And if you’re looking for a certified financial planner, check out the Web sites for the Certified Financial Planner Board of Standards (create link: and the National Association of Personal Financial Advisors. (create link:

Just as a personal trainer can help develop an exercise program specific to a client’s needs, a financial planner can help a fitness professional develop a long-term strategy for saving for retirement. A fee-based professional, who will charge you an hourly rate for his or her service, is generally recommended over one who charges by commission. The National Association of Personal Financial Advisors (NAPFA) is a professional organization of financial advisors who adhere to a specific set of guidelines and ethics for providing financial advice. According to NAPFA President Ellen Turf, a client does not need to have a specific level of income or net savings to benefit from working with a financial advisor. “It is a myth that people need to be a millionaire to experience the benefits of working with a financial advisor,” says Turf.

NAPFA professionals typically charge an hourly rate for their services. The organization’s Web site ( provides a number of tools and resources that can help you locate a financial advisor best suited to your individual needs who will conduct a financial assessment to determine the most effective way to start saving for retirement. If cost seems prohibitive consider asking the financial advisor whether or not he or she would be willing to exchange professional services. Be sure to document any bartering agreement in writing to clarify the expectations of each party.

There are many similarities between designing an effective exercise program to meet a client’s needs and planning for retirement. Helping a client achieve his or her specific fitness goals requires an initial needs assessment, effective exercise program design and implementation, and annual evaluations to measure the effects of the program. Accumulating enough money for a comfortable retirement requires the same approach: assess your needs for retirement (working with a professional, if necessary), create a savings plan to meet those needs, execute the plan and perform periodic evaluations to ensure that you’re on the right track. When it comes to retirement planning, as the saying goes, no one ever plans to fail, they simply fail to plan.

The information provided in this article is for education purposes only and does not represent, nor should it be construed as professional, legal or tax advice. To determine specific individual tax or retirement needs ACE recommends working with the appropriate financial, legal or tax professional.


petePete McCall, M.S., is an exercise physiologist and spokesperson for the American Council on Exercise. He holds a Master’s of Science degree in exercise science and health promotion from California University of Pennsylvania and is an ACE-certified Personal Trainer.

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