Thinking about your retirement planning? If you are in your 60s or older, you should be. Even if you are in your 50s, it’s a good idea. In fact, whether it’s far in the future or just around the corner, there are many reasons to start thinking about retiring long before you actually do it. One important step is to create a few alternative versions of your retirement budget to prepare for different financial situations and lifestyle choices.
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Three critical reasons are:
- Health. No matter how fit you are today, medical problems may appear, perhaps suddenly and without warning. Serious physical or mental health issues — whether your own or those of someone who needs your care — may require you to give up your practice, or cut back significantly.
- Job loss. You may want to work forever. But your firm or company might decide that despite your many contributions over the years, it is time for you to go. The reasons may be kind or cruel, personal, or business-driven, but they may force you to leave. Even if you are a solo practitioner, your principal clients might retire, be acquired, or go out of business, leaving you without sufficient work or revenue to continue your practice.
- Proper retirement planning. Leaving law practice after decades, without something to look forward to, can be jolting. You know you should be planning for as much financial security as possible, and it takes time to do that well. But what about planning what you’ll do for the rest of your life? At first, it may be a treat to sleep in, play golf, do some traveling. But you may have 20 to 30 years or more ahead of you. What will you do all day every day? The sooner you start exploring possibilities, the easier it will be to answer those questions when your retirement date approaches.
To some extent, health problems and job loss are beyond your control. If they occur, they force your hand and limit your options. Whether or not the decision to retire is up to you, thinking in advance about life after practice will help you make the transition with greater ease and confidence. Instead of finding yourself unprepared, starting right now to lay the groundwork allows you to retire enthusiastically and on your own terms when the time comes.
Why Lawyers Avoid Lawyer Retirement Planning
The legal profession has traditionally honored lawyers with long careers. It is common for lawyers to practice well beyond the customary retirement age of mid-60s. If you love your practice and continue to thrive professionally, you may see no reason to envision anything else.
But many lawyers avoid the subject of retirement out of fear. Retirement signifies the end of the professional road you have spent a lifetime creating. It portends the loss of vital facets of your life: professional identity, status, the firm community, a sense of purpose, client relationships that have been nurtured over many years, stimulating intellectual challenges, a place to go every day.
Early retirement can be a strategic option for lawyers seeking a change in their lifestyle after years of hard work. This stage can provide freedom and more time for personal interests, whether continuing to leverage legal skills in non-traditional roles or engaging in new passions outside of law.
Many lawyers’ lifelong interests and activities have revolved principally around their work, with their careers focused on becoming indispensable to their clients and the firm. Retirement raises the prospect of becoming unimportant, obsolete, bored, and financially insecure. Plus, it forces you to confront your own aging and mortality.
Retirement planning is different from other career transitions. When you progress through a career, every new move builds on what you have established; changes keep you moving forward and upward, and you have some sense of what to expect in the next stage. Retirement represents the downward curve of your career arc. As a senior partner-facing retirement from the job that has been at the center of your identity for decades, the future seems like entirely uncharted territory, full of uncertainties and without guideposts.
It doesn’t have to be that way. Retirement is a natural career stage. There are resources available to help, including personalized assistance from a mentor or coach. Exploring your options can reveal long-forgotten abilities and passions and re-ignite a sense of purpose and adventure. When you realize the joys, benefits and options open to you, you can look forward to retirement and engage in the transition with enthusiasm.
Your Retirement Options
As a lawyer it’s important to understand your retirement options so you can make informed decisions about your future. Here are some things to consider:
What’s the average lawyer retirement age?
The average lawyer retirement age varies depending on state regulations and individual law firm policies. According to the American Bar Association’s 2020 ABA Profile of the Legal Profession the average lawyer retirement age is 65-70. But that’s just an average and many lawyers retire earlier or later based on their personal circumstances and career satisfaction. The legal profession is demanding but also fulfilling and that often determines when a lawyer decides to retire.
Is there a mandatory retirement age for lawyers?
In some cases, yes, there is. Many law firms have policies that require lawyers to retire by a certain age, usually between 65 and 70. In fact, about half of all major U.S. law firms have a mandatory retirement policy. But mandatory retirement based solely on age is controversial. Competence to practice law doesn’t necessarily have anything to do with age and many senior lawyers continue to contribute greatly beyond the typical retirement age. So while some firms enforce these policies others take a more flexible approach and evaluate each lawyer’s performance and contributions individually.
The lawyer retirement age can vary greatly depending on many factors including the type of practice, income level and personal circumstances. Big-firm litigators have well-funded retirements because of high incomes and demanding schedules that leave little time for extended breaks. Government regulators have more modest incomes but have pensions so their retirement patterns are similar to other government employees. Small-firm lawyers have modest savings and look forward to their first real break in over 40 years. Each path in the legal profession has its own retirement experience and that’s because the profession is so diverse.
How to Start Retirement Planning: Three Steps
Whatever your age, there are some simple steps you can start to take right now so that you are psychologically ready, maybe even eager, for whatever comes next. The main point of these exercises is to awaken your curiosity and help you explore options. Then, when the time comes to plan your retirement, you will have all the pieces in place and deciding will be that much easier.
It is also crucial to understand and adhere to ethical rules concerning lawyer retirement, as these regulations can vary by jurisdiction and play a significant role in the complexities of selling or winding down a law practice.
When you retire from practice, a world of possibilities will open up to you. The key is to explore and learn what the best possibilities are.
1. Make a personal interest list.
Long before my friend and former physician Rob retired, he started to keep a running list of anything and everything he came across that he might want to look into more deeply when he had the time. This list, which I dubbed a “personal interest list” (PIL), included items he heard about at medical conferences and cocktail parties, in the news and in casual conversations. It included subjects to study, places to visit and projects to pursue. When you are ready to retire, a list like Rob’s makes the process easier. Rather than a “bucket” or to-do list, it is a handy reference. It reminds you of the many things that have piqued your interest over the years, which you can now take time to investigate.
Trying to come up with an entire list of possibilities as retirement looms can add to your stress. But a PIL, compiled over years, provides comfort and guidance. The entries are made in the course of you being naturally curious, not when you feel forced to find things to do when you retire. You can review your entries at your leisure, reflect on their importance to you now, and pick, sort and prioritize the items. This can facilitate planning for a fulfilling retirement. Additionally, lawyer retirement plans are crucial in preparing for life post-retirement, ensuring a smooth transition by finalizing business affairs, reviewing active cases, and informing clients.
2. Consult your network for retirement income.
As a lawyer, you know a lot about what lawyers do. But what else is out there that would allow you to use your professional skills, awaken dormant skills or learn new ones? It’s useful to learn about what other people do that might be a good fit for you. This process takes time, and the more lead time you give yourself, the more you can learn. If you have reached the point in your career where retirement is on your mind, you have likely amassed a large network of legal and business contacts. Reach out to those who have already retired to seek advice. Find out what they are doing. Are they volunteering, taking classes, traveling, caring for grandchildren? Are they using retirement to shift gears and try new kinds of work?
Many retired lawyers stay busy and productive after they leave practice by consulting, doing project-based work, assisting nonprofits, mentoring, teaching or a host of other activities. If you are intrigued by what you hear, invite them out for coffee and find out more about opportunities in that area. Ask them what their retired friends are doing, too, and if it’s something that sparks your interest, ask for an introduction.
At the same time, refer to your PIL. Choose a few items that sound most exciting to you and reach out to someone in your network who is in the field or might know someone who is.
3. Find what you love.
Some lawyers have a host of interests they have been unable to pursue because of the demands of practice. They look forward to retirement as a time when they can finally give serious attention to those longtime passions. But many lawyers have been so devoted to work that they have neglected hobbies, interests, talents and other pursuits that might give them pleasure or add meaning to their lives. Part of your exploration is to think about the things that get you excited — or that energized you sometime in the past. It can involve sports or the arts, a political cause or a religious charity, a spiritual search or an entrepreneurial urge. It may be one thing or several.
Look for patterns, happy experiences, reasons for your excitement, what gave you particular satisfaction or a clear sense of purpose. When you discern what makes you feel happy and fulfilled, you can look for similar activities to pursue.
These three easy steps will prepare you for retirement whenever the time comes. Instead of dreading an unknown future, you will have ideas, activities and projects to look forward to, and can plan for a retirement filled with pleasure and purpose.
Lawyer Retirement Planning
Lawyer retirement planning is key to a smooth transition and a comfortable retirement. Here are the basics:
Are you financially ready?
Being financially ready is the foundation of making an informed decision to retire. Start by looking at your 401k, savings and investments. Create a retirement budget to ensure you have the income to support your lifestyle. Lawyer retirement benefits may include various plans, annuities and pensions so make sure you know your lawyer retirement benefits and plan for it.
When being financially ready consider:
- Income: What’s your retirement income from all sources including pensions, retirement accounts and Social Security. Knowing your income streams will help you feel financially secure.
- Expenses: What are your retirement expenses including housing, food, healthcare, transportation and entertainment. A realistic budget will prevent financial shocks.
- Assets: What’s the value of your law practice, real estate and other assets that can be used to support your retirement. These assets will give you extra financial peace of mind.
- Debt: Include any outstanding debts including law school loans, mortgages and credit card debt. Paying off or paying down debt before retirement will reduce financial stress.
By being financially ready you can create a retirement plan that suits you and enjoy a comfortable and happy retirement. These steps will help you transition from your legal career to the next chapter of your life full of opportunities and peace of mind.
Related: “Your Boomer Retirement Problem Won’t Just Fade Away” by Ida Abbott
More Timely Advice from Ida Abbott
Ida Abbott speaks directly to men in this timely best-selling book designed to arm them with the tools and perspective they’ll need to usher professional women into the top ranks of their firms. Visit the Attorney at Work bookstore to order your copy of “Sponsoring Women” — and click this link to find related articles on how to find a sponsor and understand the difference between mentorship and sponsorship.
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