Why AM100 Lawyers Need a Unique Financial Plan
Why AM 100 Lawyers Need a Different Approach to Financial Planning
Attorneys at AM100 law firms operate in a high-performance world: long hours, intense pressure, and high stakes. With compensation often ranging from the high six figures to multiple millions, it’s easy to assume these lawyers are financially set. But behind the prestige and paychecks lies a truth that many partners and associates eventually face: your career’s earning potential doesn’t automatically translate to long-term financial security.
If you’re a partner or rising associate at an AM 100 firm, here’s why your financial planning needs to be more strategic than most—and what you can do about it.
1. You Earn More- But You Also Spend More
With great income often comes great overhead. The cost of living in major legal markets like New York, D.C., San Francisco, or L.A. is substantial. Add to that private school tuition, second homes, and the subtle (or not-so-subtle) social pressure to keep up with peers, and suddenly your discretionary income is tighter than it looks on paper.
Key takeaway: A high income makes poor planning more expensive, not less risky.
2. Your Career Has a Shelf Life
Big Law is grueling. While some make it to retirement at a firm, many burn out or transition to in-house roles or smaller firms. That means your peak earning years may be condensed into a 15- to 25-year window—and the clock is ticking.
Smart planning involves front-loading savings and setting up structures that continue to work for you if and when your income dips.
3. 401(k), PSP, and Cash Balance Plans Are Not Enough
You likely already max out your 401(k) and participate in a Profit Sharing Plan (PSP) or Cash Balance Plan. But due to IRS contribution limits, these vehicles don’t allow you to shelter enough income to replace your lifestyle in retirement—especially if you want to maintain a $300K–$500K+ annual post-retirement cash flow.
Solution: You need additional savings structures—tax-efficient, flexible, and capable of producing long-term, compounding growth.
4. You Need Tax Diversification, Not Just Asset Diversification
Many attorneys are overexposed to future tax risk. Deferred comp plans, 401(k)s, and PSPs all postpone taxes—but they don’t eliminate them. In retirement, drawing from all tax-deferred buckets can trigger higher tax brackets, IRMAA surcharges on Medicare, and even taxation on Social Security.
Strategy: Build tax-free and after-tax assets today. Roth conversions, municipal bond ladders, overfunded life insurance, and real estate strategies can all play a role.
5. Your Estate Plan is Probably Outdated or Nonexistent
With growing net worth comes estate tax exposure. Many attorneys—ironically—have no estate plan beyond a basic will. Without proper trusts or lifetime gifting strategies, your estate may be subject to unnecessary taxes and delays.
Plan ahead: Use tools like Spousal Lifetime Access Trusts (SLATs), ILITs, and charitable strategies to reduce estate tax exposure and preserve your legacy.
6. Delegation is a Strategic Advantage, Not a Sign of Weakness
Attorneys are trained to control risk, dissect complexity, and solve problems. But when it comes to your own financial life, that same mindset can lead to procrastination, over-analysis, or misplaced confidence.
The best attorneys don't go it alone—they build an elite advisory team.
Look for advisors who:
- Understand the unique compensation structures of law firms
- Offer advanced tax mitigation strategies
- Provide proactive planning—not just reactive advice
- Coordinate with your accountant and estate attorney
The Bottom Line
You’ve built a career around intellectual rigor, client advocacy, and high-stakes outcomes. Apply that same mindset to your wealth.
The earlier you get intentional with your financial strategy, the more freedom you’ll have—whether that means retiring early, scaling back, switching paths, or simply living life on your terms.
Don't wait until you're 55 to start planning like a partner. The best time to design your financial future is now.
