While some partners do continue to work in some capacity even after their official retirements, this work is less likely to produce sufficient income to support the partner’s current lifestyle and may not adequately forestall the need to begin living on retirement-designated assets. In fact, many people who have accumulated a higher net worth during a lifetime of work actually increase their spending immediately after retirement, as they tend to travel more and spend more on their families, recreation, health care, insurance and enjoying life generally.

2. Capital markets assumptions are under downward pressure. Structural imbalances in the Unites States (e.g., the unsustainable national debt combined with ever-expanding entitlement programs) and abroad (e.g., in Europe and China) suggest that assumptions regarding long-term returns must be ratcheted downwards relative to more recent norms. In many cases, average annual long-term return expectations for certain risk-based asset classes such as equities have moved down by two or more percentage points, while annual long-term expectations for more conservative asset classes such as fixed-income have moved down by one or more percentage points. These downward revisions to long-term return expectations may seem slight, but over a period of decades, they can be dramatic. More to the point, they can lead to retirement projections that, when utilized in Monte Carlo or other planning simulations, are dangerously unsustainable when the law firm partners are assumed to be retired for a period of 30 or more years.

3. Health care, tax and other costs are increasing. Responsible retirement projections for law firm partners who retire early must also account for the likelihood of increasing health care, tax and other costs of living. Despite passage of the Affordable Care Act, health-care costs have continued to rise exponentially and are likely to continue on that trajectory. This is especially true for people who are considered wealthy and are therefore at risk of being asked to pay a larger portion of their own health-care costs when politicians, regulators, insurers and providers are finally forced to make the hard choices necessary to ensure a sustainable health-care system.

Likewise, given the fact that the debt burden facing the United States is structurally unsustainable when considered alongside the current Medicare, Social Security and other entitlement programs stressed by an aging, longer-living baby boomer generation, it is more likely that tax rates and other tax-like fees will increase, not decrease, over the coming decades. This is yet another trend that makes early retirement for law firm partners a more difficult challenge, as they need to assume that taxes will comprise an increasingly larger portion of their annual spending needs.