Your financial life in one chart
The chart below shows a hypothetical lawyer’s lifetime income and expenses, from age 28 through 92. I’ve made a few simple assumptions: income ramps up over a career, you retire at 65, and your expenses in retirement grow only at the pace of inflation.
Your Income: Only So Long As You Work
The blue bars – your income – rise steadily from your late twenties through your peak earning years. They stop at 65. Done. The income spigot turns off.
Your Expenses: Never Stop
In contrast to your income, the orange bars – your expenses – never stop. They start the day you begin working and continue for the rest of your life. And in retirement, they grow. Every year. Property taxes go up. Healthcare goes up. The cost of everything goes up. For a quarter century. Maybe longer.
The Math is Unforgiving
37 years of income to fund 65 years of expenses.
The Solution
When you practice law, you earn money on your labor, your human capital. The means to a secure and independent future is to convert your human capital – while you still can – into financial capital. You must invest a meaningful amount of your income to provide for yourself in retirement.
Money that keeps working for you when you no longer can.
The total amount you should have saved by retirement can be calculated. No matter what stage you are in your career, if you don’t know what this number is, and just as importantly how to get there, you owe it to yourself to figure this out now. Start with our retirement calculator.
Because the spigot turns off. The bills don’t.
Tim
