Hi All,

I wanted to put something together for the legal professionals in our group. Let's talk retirement planning.

Retirement planning can be a daunting task for many professionals, but for legal professionals, it can be even more complex. Legal professionals often have unique challenges in retirement planning, such as managing student loans and understanding complex retirement accounts. However, with the right strategies and tools, preparing for retirement as a legal professional can be manageable and successful.

Start with a plan

1. The first step in preparing for retirement as a legal professional is to create a retirement plan. Your plan should take into account your current financial situation, your retirement goals, and any potential risks or obstacles that may impact your retirement. 

It is important to choose a yearly dollar amount you would prefer during retirement. You also may want to consider how old you would like to be when you retire. Are you considering going part time at a certain age? 

You may want to consider your family history as well. Is your family long lived? Are there any prevalent medical issues in your family that may affect your retirement decision? 

You may want to consider working with a financial planner who has experience working with legal professionals to help you create a personalized retirement plan.

Prioritize debt repayment

2. Legal professionals often have significant student loan debt, which can impact their ability to save for retirement. It’s a good idea to decide what options are available to address your student loan debt and make a plan. Several states and legal firms offer options for loan forgiveness or repayment. Would any of these options work well for your situation? A new law was passed in January of 2023 that allows employers to match your student loan payments with retirement plan contributions. It would be worth finding out if your employer is planning on participating in the program. You can also consider consolidating or refinancing your loans to take advantage of lower interest rates.

Maximize retirement accounts

3. There are a lot of options for retirement savings. If you are employed, it is important to take advantage of the 401(k), 403(b) or Thrift Savings Plans offered by your employer. Make sure you are contributing enough to maximize your employer's match. It is also important to look at the options provided in these retirement accounts. Make sure you are choosing mutual funds with low management fees. Many retirement specialists think index funds are your best option to maximize your returns over time. They also recommend rebalancing your investments at a minimum every year. It is typically simple to set up an automatic rebalancing in these types of retirement accounts so see what your options are. 

Also check into Roth 401(k), 403(b) or TSP accounts, is this an option with your employer? You may want to consider when would be the best time to take out taxes. Now or when you retire? Maybe a mix of both options would work best for you. Individual retirement accounts (IRA) are also available. Be aware that for high income earners the IRS no longer offers a tax write off. It may be smart to look into a backdoor Roth IRA to maximize tax free retirement funds in the future.

Are you self-employed? You have even more options. Talk to your CPA and decide which type of account would work the best for you and your employees.

Build an emergency fund

4. An emergency fund is essential for financial security and retirement planning. Having the ability to cover unexpected expenses without using credit card debt is very freeing. One never knows what will happen in life. Is something going on at work and it is time to find something new? Is someone in the home ill and requires a lot of care? Is there an expensive home or auto repair?  Aim to have 3-6 months of income saved in a separate account. Consider setting up an automatic transfer from your checking account to your emergency fund to make saving easier. 

Plan for social security benefits

5. Social security benefits can be a significant source of retirement income for legal professionals. It is easy to find out how much you currently can expect  by going to https://www.ssa.gov/myaccount/statement.html

Consider delaying your social security benefits to maximize your monthly payments when appropriate.

In conclusion, preparing for retirement as a legal professional requires planning and attention to detail. Prioritizing debt repayment, maximizing retirement accounts, building an emergency fund, and planning for social security benefits are key steps to maximize a successful retirement. You may want to work with a financial planner who has experience working with legal professionals to help create a personalized retirement plan and to ensure that you are on track to meet your retirement goals. It is best to find one that will keep your interests at the forefront while planning your retirement.  Typically, a financial fiduciary is the way to go and you may want to consider one that is paid on a fee for service basis rather than as a percentage of your assets.

Talk Soon!

Heidi