Finding Purpose Beyond Practice
Many lawyers struggle with the idea of retirement. After devoting decades to building a successful practice, often working seven days a week, the thought of stepping away can feel like losing a part of your identity. The legal profession provides not just a livelihood, but a sense of purpose and standing in society.
Instead of viewing retirement as the end of your career, consider it a transition to the next chapter of your professional legacy. This mindset shift can make planning for retirement emotionally easier.
For law firm owners, a complete exit isn’t the only option. You might sell your practice or partially retire but stay on as “Of-Counsel” for several years, mentoring the next generation while gradually reducing your workload. This approach allows you to maintain your professional identity while creating space for other priorities — whether that’s spending time with grandchildren, traveling with your spouse, or pursuing long-delayed personal interests.
With thoughtful planning, you can preserve your legacy while embracing new opportunities. The key is starting the planning process early, ideally several years before your target retirement date.
Taking Inventory of Your Financial Resources
Once you’ve mentally prepared to address retirement planning, your next step is to assess your current financial position.
Assets
Make a comprehensive list of your retirement accounts, including:
- 401(k) plans
- Individual Retirement Accounts (IRAs)
- Cash Balance pension plans
- Real estate holdings (noting whether you plan to maintain or sell these properties)
- Brokerage accounts
- Other investments
Income Sources
Identify potential retirement income streams, including:
- Social Security benefits
- Pension payments
- Rental income
- Law firm buyout installments
- Investment income
Living Expenses
Get a rough idea of your anticipated spending in retirement. Pay particular attention to after-tax expenses. Knowing how much you’ll need to live comfortably is essential to designing a sustainable drawdown strategy.
Valuing Your Law Firm as an Asset
Many attorneys underestimate the transferable value of their practice. With proper planning, your firm can become a significant retirement asset. Key factors that increase a firm’s transferable value include:
Systems and Processes
Buyers value firms that can operate without the founding attorney’s constant involvement. Review your operations to identify processes that currently depend on you. The more your firm can function independently, the higher its potential sale value. Start delegating responsibilities strategically to reduce this dependency.
Brand Reputation
Consider how much of your success comes from your personal reputation versus your firm’s brand. Implementing strategies to strengthen the firm’s independent identity can significantly increase its marketable value.
Financial Performance
Organized financial records and predictable revenue sources are crucial when valuing a practice. Potential buyers want to see consistent financials and understand your client acquisition methods. A firm with stable, documented performance metrics will command a higher price.
Converting Assets to Income – Tax Efficiently
Building wealth during your career requires different strategies than drawing down assets in retirement. Creating a tax-efficient withdrawal plan can preserve your savings substantially longer.
For example, if you’ve accumulated significant pre-tax assets in 401(k)s or IRAs, consider strategically converting portions to Roth accounts in lower-income years. A key window for this strategy is the period between retirement and when Required Minimum Distributions (RMDs) begin — currently age 73 for most retirees. This window is valuable because once RMDs start, they can push retirees into higher tax brackets. This diversification gives you flexibility to manage your tax burden throughout retirement.
For the charitably inclined, options like Qualified Charitable Distributions from IRAs or establishing a Donor Advised Fund can reduce your tax liability while supporting causes you care about.
Working with an advisory team who specializes in attorney retirement can help you develop withdrawal strategies that could save hundreds of thousands in unnecessary taxes over your retirement years.
Stress-Testing Your Retirement Plan
The assumptions in your initial retirement plan will inevitably need adjustment. Regular review allows for small, manageable corrections rather than major, potentially irreversible mistakes.
Consider how market volatility might affect your plan. Using tools like Monte Carlo simulations, which test your plan against thousands of potential market scenarios, provides a more realistic picture of possible outcomes.
Implementing “Guardrails” in your planning can add further security. These are predetermined thresholds that trigger increases in retirement distributions when your accounts perform well, or decreases when values drop below certain levels. This disciplined approach helps preserve assets during market downturns.
Embracing Your Next Chapter
With comprehensive planning, retirement becomes not an ending but a transition to a rewarding new phase of life. The years of knowledge and expertise you’ve accumulated don’t disappear. Instead, they transform into wisdom that can benefit your family, community, and the legal profession in different ways.
By addressing both the emotional and financial aspects of retirement planning well in advance, you’ll position yourself to maintain your professional legacy while embracing new possibilities. The key is to start the conversation now, even if retirement seems distant.
Your career has been defined by helping clients prepare for their futures. Now it’s time to apply that same diligence to planning your own next chapter.
David Hunter, CFP® is a CERTIFIED FINANCIAL PLANNER™ and owner of First Light Wealth, LLC, a financial planning & wealth management firm with a unique focus on serving attorneys nationwide. David has over a decade of experience helping clients build financial plans and has been featured in publications such as Attorney at Work, ThinkAdvisor, MarketWatch, Financial Planning, and InvestmentNews. David also writes weekly to attorneys in his popular Money Meets Law newsletter. For more about David, visit firstlightwealth.com/lawyers or connect with him on LinkedIn.
