No matter where you are in your career, retirement needs to be on your radar. Having a solid plan in place is beneficial to your future when the time comes to retire – or if you want to transition into a semi-retired role.
There are many reasons lawyers may put off retirement, but having a plan in place helps you confront your challenges and make smart decisions for the future.
Lawyer Retirement
In some ways, retirement for lawyers is similar to retirement in any other profession – it’s an end to your working life to enjoy leisure time. This usually comes later in life – around 65 or so – and may be because of desire or health reasons.
But for lawyers, there’s some extra work involved to retire. If you have a law practice, you have to make a plan for your current clients and transfer, sell, or close your practice. If you’re working at a law firm, you will need to discuss retirement plans with management. There are also ethical rules regarding lawyer retirement.
Typical Retirement Age for Lawyers
According to the U.S. Census Bureau, the average retirement age is 65 for men and 63 for women. In the legal profession, however, people tend to be a little older when they retire. The American Bar Association’s 2021 ABA Profile of the Legal Profession revealed that nearly 14% of lawyers are working past the age of 65.
Mandatory retirement policies are a standard practice in a lot of law firms, however. Forcing older lawyers to retire when the time comes creates a path to leadership positions and opportunities for younger lawyers to flourish. This isn’t always set in stone – some firms use a soft transition to get lawyers into a mentorship position to transfer responsibilities and relationships.
While some law firms have a mandatory retirement policy, most lawyers choose to retire when they want. But whether that time is decades away or coming up quickly, it’s never too early to begin lawyer retirement plans.
Regulations for Lawyer Retirement
Like every other aspect of law, there are ethical considerations and rules for lawyer retirement. These can vary by jurisdiction but generally include:
- How you will handle your client files and data when you retire.
- How you will communicate your retirement to clients, including documenting the communication, transferring files, and informing the client of the transfer. This is outlined in ABA Rule 1.4.
- If you’re selling your law practice or transferring it to another attorney, you have rules to follow. The same is true if you’re closing your law practice completely.
- You need to know if you’re required to maintain your malpractice insurance after retirement, and if so, for how long.
- Depending on if you’re retiring fully or semi-retiring, you may need to keep up your registration and CLE requirements for your law license.
Keep in mind that some states have resources to help lawyers with retirement. For example, the California State Bar has an ethics resource page with a collection of links to rules and statutes for lawyer retirement.
Early Retirement for Lawyers
Amid the Great Resignation, more lawyers chose to reduce their commitment to their law firms or leave law entirely – often well before retirement age. They already experienced the tough upward climb in their careers and enjoyed the fruits of that labor for a while, ultimately deciding that the time has come to take it easy.
If you want to retire from practicing law early, you have plenty of options to use your JD, including sitting on a board for a nonprofit, contributing to pro bono work, or working in related non-legal fields like compliance, teaching, or legal consulting. You could also pursue a completely unrelated passion project like starting your own business.
If you want to truly retire – and can afford it – life has a lot to offer. Consider all the endeavors you couldn’t accomplish while you were in law school and coming up in your career, such as writing, travel, art, or just spending time with family.
Steps to Prepare for Lawyer Retirement
Ready to knuckle down and get your retirement plan in place? Here’s what to do:
Assess Financial Readiness
Financial preparedness is the most important part of making the decision to retire. Consider your 401k, savings, and investments, then create a retirement budget to ensure you have the income to support your lifestyle at your preferred retirement age.
There are also retirement benefits for lawyers in some areas, which may include:
- Retirement income, which is usually paid on a monthly basis
- Return of capital, which is usually paid within one year of retirement
- Accounts receivable and work-in-progress at the time of retirement, which is paid over a few years
- Retirement benefits like social security and Medicare
Create a Retirement Plan
With a clear view of your financial situation, you can create a retirement plan that includes your estimated future living expenses. Consider the lifestyle you want to have and set realistic expectations for food, housing, insurance, taxes, transportation, and healthcare, as well as entertainment, travel, and hobbies.
Manage Client Relationships and Succession Planning
Whether your plan to retire is around the corner or in the near future, you should have an exit plan in place to prepare for your retirement and any possible setbacks along the way. Create a succession plan that designates a successor for your cases or create a plan to sell your practice when you retire. Legal case management software can be helpful for keeping your client information organized and ready for your successor.
Continue Professional Development and Stay Connected
Retirement isn’t a time to let your law degree gather dust. Though you want to enjoy your time, consider doing volunteer work to ensure your skills stay sharp. You have plenty of options, including nonprofits, academic institutions, and government agencies. Volunteering not only helps you maintain your skills but keeps you connected with the professionals in your local network.
Reasons Lawyers Choose Not to Retire
According to the American Bar Association’s 2021 ABA Profile of the Legal Profession, the pandemic prompted about a third of senior lawyers to change their retirement plans. But instead of retiring early, they put a pause on their retirement plans.
This could be because of the income disruption that many (not just lawyers) experienced during the pandemic, but there are other reasons that lawyers may not want to retire:
Personal Fulfillment and Passion for the Profession
Investing in an education to become a lawyer is a big commitment. For many lawyers, practicing law has been a dream since a young age and it took a lot of work to get there – often missing out on other aspects of life in the process. If they retire, especially with a firm they built from the ground up, it’s a loss of professional identity.
Financial Considerations and Necessity
For some, retirement is a dream but losing income isn’t an option. That even applies to lawyers, especially after the pandemic. This is an even bigger concern if there’s not a succession plan in place to transfer clients and gain the capital from selling a practice.
Desire to Maintain Professional Relationships and Connections
Lawyers get comfortable with routine, just like anybody else. Going into the same office and greeting the same people is a sort of peace that makes people fear making a big change. They may fear losing touch with the professional relationships and connections they worked so hard to build.
But there are probably people who want to retire as well and they’re waiting on that move from a senior partner. And if there are succession plans in place, anyone who’s not ready for retirement can stay at the firm.
Outlook on Lawyer Retirement
The legal landscape is changing, especially when it comes to lawyer retirement. The older generation is retiring and younger lawyers have different retirement goals and expectations, leading to early retirement or transition into alternative career paths that can alter the future of the profession.
