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More attorneys choosing gradual retirement

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Indiana Lawyer Focus

Retirement used to mean loading up the Winnebago at age 65 and hitting the open road. For people who have an unlimited amount of money to spend on gas, that freewheeling lifestyle might still be an option. But people are living longer now than ever before, and some are choosing to extend their careers beyond what they originally planned.

It’s a trend that Ogletree Deakins shareholder Ann Carr Mackey has noticed in the legal profession. She has handled employee benefits law since the late 1980s and exclusively for about a decade. She’s seeing more lawyers choosing to transition gradually from practice to retirement.

ann mackey Mackey

“I think it’s a combination of economics, of fewer lawyers and fewer employees generally having a pension plan that guarantees a significant portion of their income for life,” she said. “I think there’s an awareness or concern about the economics of retirement. We’re all living longer, so you’re now looking at: Do I have enough money to live on for 25 years instead of 10?”

Best laid plans

Bob Hamlett, a member of Frank & Kraft who handles estate, tax and business planning matters, said that he is aware of a few major pitfalls in retirement investing.

“I think there are two, and they are opposite sides of the same coin – one is not starting soon enough, and two is not getting good advice,” he said. “If you save the money and start putting it away for retirement, what are you going to do with it? Because, unfortunately, hiding it under the mattress won’t help much.”

Paul Donahue, a certified financial planner and accredited investment fiduciary for Valeo Financial Advisors, explained that the deferred compensation plans that used to be popular for top-level law firm executives seem to be declining in popularity.

Many law firms offer some combination of plans, Donahue said. In firms where a deferred benefit plan used to be the standard, it may have been cut off at some point, with new attorneys enrolling in 401(k) plans instead.

In 2011, the Internal Revenue Service announced that beginning this year, annual elective employee contribution limits for 401(k), 403(b) and 457 plans would increase to $17,000 from $16,500. A catch-up contribution limit of $5,500 means people over age 50 could contribute $22,500.

For senior partners and top-level executives, Mackey said a 401(k) plan is probably not sufficient to maintain the same standard of living in retirement. And generally, people are probably not saving enough, she said.

“Even in these qualified plans, if employees – lawyers – don’t save enough during their working years starting very young, then they get to retirement and they do not have enough money to maintain their lifestyle, or even a similar lifestyle,” she said.

Solo and small firm attorneys may experience additional challenges in funding their retirement.

“The small firms don’t have the kinds of retirement programs that the large firms have and can afford, so individual lawyers are pretty much on their own,” Hamlett said. “Small partnerships can create a profit-sharing plan or retirement plan and be diligent about funding it, and that’ll help.”

Unknown variables

In saving for retirement, planning for the worst may be the best approach.

“Any number of things can happen, and we see it all the time,” Hamlett said. “Fortunately, I’ve been blessed not to have any of those events – a disabling injury where you can’t work. Do you have disability insurance that can replace some of your lost income? Loss of a spouse who is working – again, can you replace that income with life insurance or something like that?”

Mackey pointed out that Social Security and Medicaid funds are quickly drying up.

On April 23, the Social Security Board of Trustees announced that the combined assets of the Old-Age, Survivors and Disability Insurance Trust Funds will be exhausted in 2033, three years sooner than projected last year. The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate. That means that, continuing at this pace, in 2033, Social Security will be able to cover only 75 percent of full benefits scheduled to be distributed.

Working longer

Attorneys can help supplement their post-practice living expenses by continuing to work in some capacity. And for attorneys like Don Knebel, continuing to work after retirement provides an asset more valuable than money.

“I think when you’ve got almost 40 years doing things that keep your mind occupied, winding down and doing nothing is not a very attractive possibility,” he said.

donald knebel Knebel

Knebel, a partner at Barnes & Thornburg, said it’s important for his clients to have someone to turn to when he retires in December 2013, so he has begun gradually transitioning his practice to the firm’s younger attorneys. He will then become more actively involved with the Indiana University Maurer School of Law’s Center for Intellectual Property Research, where he is currently an adjunct professor and senior adviser to the center.

“Teaching law is something I have thought about my entire career, and from time to time, I’ve done guest lectures in other people’s courses and enjoyed that, but having a full-time practice as a litigator, it was impossible to take an appointment like this,” Knebel said.

Knebel will also stay busy with his many civic and volunteer roles, like chairing the board for the Center for Interfaith Cooperation and co-chairing the 2013 Classical Music Competition for the American Pianists Association.

The take-home message

Both Mackey and Hamlett emphasized that the key to successful retirement planning is to begin saving early – and to seek some guidance.

“Depending on the nature of their practice, many attorneys – because they don’t deal with these kinds of issues regularly – are unfortunately just woefully ignorant of retirement planning and those types of things,” Hamlett said.

Mackey said that she understands saving money may be difficult for young attorneys who graduate from law school with significant debt. But starting early may be the key to growing wealth over time.

“For young people, they ought to start doing something, and don’t wait until they feel like they’re in a position to save a lot,” she said. Even a small amount dedicated to retirement savings can result in significant growth if done for 30 or 40 years.•

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  1. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  2. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  3. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

  4. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

  5. Brian W, I fear I have not been sufficiently entertaining to bring you back. Here is a real laugh track that just might do it. When one is grabbed by the scruff of his worldview and made to choose between his Confession and his profession ... it is a not a hard choice, given the Confession affects eternity. But then comes the hardship in this world. Imagine how often I hear taunts like yours ... "what, you could not even pass character and fitness after they let you sit and pass their bar exam ... dude, there must really be something wrong with you!" Even one of the Bishop's foremost courtiers said that, when explaining why the RCC refused to stand with me. You want entertaining? How about watching your personal economy crash while you have a wife and five kids to clothe and feed. And you can't because you cannot work, because those demanding you cast off your Confession to be allowed into "their" profession have all the control. And you know that they are wrong, dead wrong, and that even the professional code itself allows your Faithful stand, to wit: "A lawyer may refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists. The provisions of Rule 1.2(d) concerning a good faith challenge to the validity, scope, meaning or application of the law apply to challenges of legal regulation of the practice of law." YET YOU ARE A NONPERSON before the BLE, and will not be heard on your rights or their duties to the law -- you are under tyranny, not law. And so they win in this world, you lose, and you lose even your belief in the rule of law, and demoralization joins poverty, and very troubling thoughts impeaching self worth rush in to fill the void where your career once lived. Thoughts you did not think possible. You find yourself a failure ... in your profession, in your support of your family, in the mirror. And there is little to keep hope alive, because tyranny rules so firmly and none, not the church, not the NGO's, none truly give a damn. Not even a new court, who pay such lip service to justice and ancient role models. You want entertainment? Well if you are on the side of the courtiers running the system that has crushed me, as I suspect you are, then Orwell must be a real riot: "There will be no curiosity, no enjoyment of the process of life. All competing pleasures will be destroyed. But always — do not forget this, Winston — always there will be the intoxication of power, constantly increasing and constantly growing subtler. Always, at every moment, there will be the thrill of victory, the sensation of trampling on an enemy who is helpless. If you want a picture of the future, imagine a boot stamping on a human face — forever." I never thought they would win, I always thought that at the end of the day the rule of law would prevail. Yes, the rule of man's law. Instead power prevailed, so many rules broken by the system to break me. It took years, but, finally, the end that Dr Bowman predicted is upon me, the end that she advised the BLE to take to break me. Ironically, that is the one thing in her far left of center report that the BLE (after stamping, in red ink, on Jan 22) is uninterested in, as that the BLE and ADA office that used the federal statute as a sword now refuses to even dialogue on her dire prediction as to my fate. "C'est la vie" Entertaining enough for you, status quo defender?

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