Ready for “Life After Law?” 3 Questions to Answer

So, after many years, are you finally thinking of doing it? What am I talking about? Retirement, of course! Life after your career in law. While you have much to look forward to in retirement, there are a few questions we think you should be able to answer confidently before you decide to call it a day. Here are three of the most common (and important) questions to consider.

1. How much can I safely spend?

For almost every client I work with, the single largest factor that impacts the strength of their retirement plan is their annual spending number. Also, I’ve yet to have a client retire and dramatically reduce their spending. You’re accustomed to a certain lifestyle, and you’ll want to at least maintain, if not expand, that lifestyle once you retire. For example, think about all those great trips you’ve wanted to take for the last 20 years but couldn’t. Now you’ll actually have the time to take them. Those trips cost money (as do most other leisure and entertainment activities), so you need to know whether the spending number that your desired lifestyle requires is sustainable. In our experience, assuming that clients retire while they’re still young and healthy enough to travel, spending tends to tick upward in the first 10 or so years of retirement. Will your financial plan be able to support that spending? Before you hang up the proverbial cleats and move on from lawyering, you need to ensure your nest egg can support the lifestyle that you’ve come to enjoy—and want to continue enjoying. A good financial planner can likely help you determine what that safe spending number is and about how much after-tax money you’ll need to save between now and retirement to make that work.

2. How will I fill my time?

In short, are you retiring to something or simply retiring from something? In my experience, folks tend to underestimate how many hours they’ll need to fill once they’re not on conference calls, racing to client meetings and traveling for work. What will you do in retirement to find meaning and purpose? We suggest starting with what you enjoy. As a lawyer, you have tremendously valuable skills and knowledge that many organizations could benefit from. Perhaps you can volunteer with an organization that’s important to you, utilizing your legal experience to help that organization navigate complex issues. Ideally, you’ve also developed some type of hobby over the years that you’d been hoping to enjoy more once you had the time. The point is, start thinking and planning now while you’re still busy working, to help figure out exactly what you’ll do once you retire and suddenly have an extra 40 to 60 hours per week to keep yourself busy, engaged and fulfilled.

3. Should my investing approach change now that I’m living off my portfolio?

While you’re working, the income spigot is plugged into your firm, and your salary and partner distributions come pouring out on a regular basis. A huge adjustment for retirees is getting used to having that income spigot now plugged into their portfolio and steadily drawing down their assets. It feels very different once your “paycheck” comes from yourself instead of your firm. How might this affect the way your portfolio is invested? While you’re younger, working full time and not touching your portfolio, you may be more growth-oriented in your investment strategy. Once you retire, you might be tempted to adjust your stock-bond mix into a more income-oriented approach focused largely on interest and dividends that create cash flow. Everyone’s situation is different, and no singular “right” answer exists regarding how your portfolio should be allocated once you retire. For us, the key is to have a solid financial plan and to understand how your plan is expected to perform based on different potential stock-bond ratios. A good financial planner can help you understand how the strength of your retirement plan may change based on different stock-bond mixes. This will help you land on the right mix for you, and you can feel confident you’re likely investing in a way that works for your particular circumstances.

Retirement may be fast approaching, or it may still be several years off. Either way, we suggest making sure you devote adequate time and thought to these three important questions, and get some professional advice to help answer them before you choose to “exit stage left” and proceed with your life after law.

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