Money Lessons for Lawyers from the Gridiron
It’s the most wonderful time of the year! You’re probably thinking that I’m referring to Christmas…Well, as much as I love a little yuletide cheer, I’m actually referring to the college football bowl season, which is fast approaching. This got me thinking, what lessons from the gridiron can help lawyers think more strategically about their money? I’m glad you asked…
Better Have a Good Game Plan
Perhaps the greatest college football coach ever, Nick Saban is most admired for legendary game plans. He is a genius at figuring out how to take away what the other team does best. Even if you don’t care about football, you must admire the precise execution of a brilliantly designed game plan.
So, if retirement is the game in your financial life, how well-prepared are you to win the game?
- It starts with a target for how long you plan to work. Some law firms allow for great flexibility here while other firms have mandatory retirement. Setting a target retirement age is step one to mapping out a plan for how to make your money last.
- Next, calculate how much it costs you each month to enjoy your desired lifestyle. This helps you calculate how much you need to save between now and retirement to sustain your preferred lifestyle into your 90s. Lawyers create their wealth by year-over-year compensation growth. So, you should come up with an annual after-tax savings plan and link that to your compensation cycle so you know how much you will save from your salary, bonus and distributions (for partners).
- Next, build a portfolio that matches your risk tolerance and return expectations, enabling you to sleep well at night and have enough growth to outpace inflation. Resist the temptation to trade in and out of the market since that type of “market timing” strategy almost never works. A secure retirement will not naturally happen on its own, it takes some solid game planning.
Remember That Defense Wins Championships
As the saying goes – offense sells tickets, but defense wins championships. For lawyers, here are a few key defensive strategies to keep top of mind.
- First, fortunately, many law firms offer solid long-term disability insurance hopefully your firm is in this camp. However, often even the most generous long-term disability insurance packages are not enough to fully replace your monthly income if you were to become impaired and unable to practice law. Talk with your insurance professional to make sure you have sufficient long-term disability insurance so you don’t have to significantly diminish your lifestyle should you be unable to practice law for some period.
- Next, make sure that you are well-covered with personal liability or “umbrella” insurance. Maybe you are fortunate enough to own a lake house, boat or jet ski. While those “toys” are a lot of fun, they also increase your risk of liability. Make sure that you have enough umbrella insurance in place to protect your net worth should you ever become the defendant in a lawsuit.
- Finally, it’s all too common for the “cobbler’s kids have no shoes” syndrome to be true of lawyers when it comes to their estate plan. Lawyers are often so busy solving other peoples’ problems that they forget to make sure their own bases are covered. Assess your own situation. Do you have these basic estate planning documents in place: will, revocable living trust, powers of attorney for healthcare and property? If not, reach out to one of your estate planning lawyer friends and get these documents buttoned up. You will sleep better knowing that you have these in place.
As you watch college football this bowl season cast your mind to your own situation and make sure you’ve got a solid game plan for your future.
Justin works closely with clients to design wealth management plans that take into account the full spectrum of their career and personal concerns with a specialization in advising law firm partners. Justin earned his MBA from Northwestern University’s J.L. Kellogg School of Business.