|Oregon State Bar Bulletin OCTOBER 2011|
I Think I Know How to Retire
By Scott McArthur
Over the years I have written a number of articles on practice management. Writing these articles helped me plan and organize my own professional life.
I spent more than 35 years practicing law, most of it solo, in Monmouth — not an inherently profitable place to be a lawyer. I sold my practice 11 years ago and cut back to working part time. I quit working as a practicing lawyer four years after that.
Now that I have been retired for a while I think I have finally figured it out. I think I know how to retire. For those of you who are looking forward to joining me in retirement, let me share what I have learned.
I have a sort of rigid outlook on life. Over the years I have adopted what I call “McArthur’s Rules,” some rules for retiring and being happy in doing so.
Rule 1. Plan on quitting the practice while you still feel good and before you have to. Plan well in advance. Pick an early date. If you are not ready or able to retire when that date arrives, it is relatively easy to stick around for a while longer. It is not that easy if you are forced to quit the practice before you (and your family, your staff, your partners and your bank account) are ready for the change.
Rule 2. Make sure you have enough money. How much you need to save for retirement depends upon any number of factors: 1) How long are you going to live? 2) How much are you going to spend? 3) How much do you want to leave behind when you finally pass on?
A good place to start your research is on the Internet. Look up “Life Expectancy Tables.” This will bring up a collection of various actuarial tables. They ask you a series of questions about your health and living practices and estimate how many years you have left.
These tables vary widely. But they will give you an idea how long you are likely to live.
Another factor to consider is how old your parents and grandparents were when they passed on. Genetics plays an important role in planning for old age. If your parents and grandparents lived to a ripe old age, chances are that you will, too. If they did not, beware. Maybe you need to review what caused their early demise, and what you can do to keep it from happening to you.
What is your personal health situation? Do you drink to excess? Do you smoke? Are you overweight? Do you get regular exercise? These are all factors.
But, most important of all, guess long. We all want to live a long time. But it is financially more comfortable to die with cash in the bank than to die broke.
Rule 3. Decide what it is going to cost you to live after you retire. Some of the life-planning writers suggest we ought to plan on living during retirement on 80 per cent of our working years’ income. Nonsense. Plan on 100 to 110 per cent. Maybe even more. If you are going to retire, be able to enjoy it.
First pay off your debt, especially your home mortgage. A lot of retirees who retired in recent years with a sizeable mortgage against their homes have found themselves burdened with a house that is worth less than the mortgage against it.
Next, figure how much you will be getting each month from Social Security. The Social Security Administration will give you an annual estimate of what your monthly Social Security benefits will be at a variety of retirement ages.
Consider whatever pension you may be entitled to. But be cautious in relying on your pension income. Remember, private employers can go broke. And who is able these days to predict the future income from a government employee’s pension?
From this you should be able to determine how much additional money you will need each month after retirement to pay the expenses you will need — and want — to meet.
In order to do this, you will need to build your own personal retirement fund. Whether it is an IRA account, or one of the other retirement funds, make sure that you will have enough money to live the good life when it comes time to retire and take it easy.
Should you move to where you can live cheaper?
Most people retire where they lived and worked. But for some who are not linked as strongly to their community as others, there are alternatives.
Any number of Americans have moved out of the country, where the living is cheaper. There are so many American expatriates in Mexico and Costa Rica that weekly English-language expatriate newspapers are published in Mazatlan and San Jose. Many who retire overseas do come back to the U.S. when age begins to take its toll. Check on the availability of medical service and insurance coverage outside the U. S.
Taxes may be a consideration. Oregon has no sales tax. But is has income and inheritance taxes that some consider costly. A couple of my friends moved to Southwestern Washington. That way they can avoid Oregon’s income tax (Washington has none) and escape the Washington sales tax by doing their shopping across the Columbia River in Oregon.
Rule 4. If you are a government or corporate lawyer, do it with reasonable notice. The same applies if you are a partner or shareholder in a private law firm. This will help assure that the folks you leave behind when you go out the door will have a good memory of your departure.
If you practice in a multilawyer firm, make sure that you — and they — understand the retirement provisions of your partnership or employment agreement. Plan well ahead for this contract provision. Don’t wait until the year before you retire to start talking about your benefits.
Rule 5. Protect your clients. As a lawyer, you have an obligation to your clients to assure them of competent representation after you leave. Some considerations:
Are you going to quit cold turkey, or phase out your practice gradually?
If you are a sole practitioner, are you going to merge or sell out to another firm, or are you going to bring in an associate and sell out to your new associate?
Remember also that a successful law firm, like any business, is worth a price commensurate to the revenue it produces.
Rule 6. Plan to stay busy after you retire. Every community has its coffee shop with a couple of tables filled with old men having their daily morning coffee. This is good companionship. But, sadly, for some of the coffee crowd, this is about all that they have left of their lives.
Can you find something to do when you are retired?
The test: Write down on a piece of paper the 10 things you most enjoy doing. Then when you retire, do them.
It is my opinion that in retirement we each need four things:
1) The money to live a good life.
2) The physical ability to enjoy retirement years.
3) Someone to share it with.
4) A feeling of worth.
The feeling of worth is the most difficult challenge. We achieve a feeling of worth by being productive. Some attorneys accomplish this by continuing to practice law. But most find their feeling of self-worth elsewhere. You don’t have to sign on as a relief school bus driver or a greeter at Wal-Mart to keep busy.
Use your lawyer skills. Be an arbitrator. Be a mediator. Our state court system has formalized the use of arbitrators and mediators. Certification standards have been adopted. There is a continuing need for competent, qualified mediators and arbitrators. It doesn’t generally pay that much, but many lawyers find it a lot more satisfying than practicing law.
Polish up your social skills. Join a service club or social organization.
There is a continuing need for volunteers. Work with your church, your schools, your local historical society, your local bar association or legal aid office. There is a real need for volunteer lawyers able to lend a hand to those who need their help but cannot afford it.
Do a lot of traveling. I like cruises, myself. You see some wonderful things. You meet some delightful people. And if you keep an eye out for a good price, you can do it without unreasonable expense.
And most important, remember the advice an old lawyer gave me many years ago: “Always be prepared for the unexpected.”
The Rules, Applied
So, what did I do when I got ready to retire?
I hired an associate. His parents were clients of mine and I knew the family. We worked together for a couple of years and then I sold out the practice to him. I worked part time in the office as his associate for three or four years after that. Then I quit the law business. I have worked part time since then as a domestic relations mediator and as an arbitrator on assignment principally from the courts in two counties.
I have written five local history books. I am active in the local Masonic Lodge. I unpacked the BB-flat tuba that I have owned since I was in high school, and I haved played in several community bands and with a Civil War re-enactors group.
I was injured in an accident, and I stay on my feet with the help of a good doctor and by a ritual of exercise that takes me to the gym three mornings a week.
I have found a good friend. We have toured the country and the world.
And I’m not broke yet.
ABOUT THE AUTHOR
Scott McArthur, a Monmouth arbitrator and mediator, is a former member of the OSB Board of Governors.
© 2011 Scott McArthur