Most of what I write is about numbers, so yes, that makes me a geek. However, as a search consultant for almost 18 years now, numbers play into every position I fill. How many years of experience since law school? How many years of healthcare experience? How many years of securities experience?
And, perhaps it’s because I recently turned 57, the question often comes up of how many more years PERIOD!? How many more years do I want to work? How many years will I live after that? The first of the Baby Boomers (born in 1946) reached the traditional retirement age of 65 in 2011, meaning we are five years into Baby Boomers supposedly leaving the workforce. However, many law firms are finding that some of their most productive partners are older than 65. Shortsighted firms with mandatory retirement ages at 65 are losing partners with large books of business—and more open-minded firms are gladly taking them in.
The same problem exists with in-house legal departments. It often comes up under the guise of “General Counsel succession planning.” Some HR genius or snazzy consultant must have recently written a book on succession planning because it seems to be everywhere. And while succession planning for the senior executive team makes sense, law departments are typically quite small so the pool of existing employees who could become the GC may be populated by as little as one or two candidates.
The 2009 recession certainly complicated this matter as retirement nest eggs dropped in dollar value by 50% or more. This had the effect of delaying retirement for many General Counsel. Here we are seven years later and presumably most retirement investments have rebounded nicely and perhaps even grown further, so “what’s the holdup, old fogeys?” Get on out of here!
If you talk to a financial planner, you may gain some insight into the problem. My wife and I recently went through this exercise with our financial planner and found that he expected us to live to be 90. Frankly, I think that number is too low. If one looks at the advances in healthcare in the last 10 years that have extended physical health and imagines how many more advances will take place in the next 10 to 15 years, it’s easy to project a life expectancy of age 95—and with the possibility to travel and stay active well into your 80s, if not longer. So if one retires at age 65, that requires financing 30 years of retirement, including the possible desire for 20+ years of dream vacations, country club memberships, weekend getaways, concerts and other events. Even the youngest lawyers typically began work at age 25. So let’s do the math (work the numbers, people). Can we work 40 years and expect to save and invest enough to finance 30 more years of a fulfilling existence on this wonderful planet? Great question…
In addition to the question of financing retirement, an equally serious question arises around what one does for another 30 years. My grandmother used to jokingly tell my grandfather, “I married you for better or worse but not for lunch.” How low can a golf handicap get? How many sets of tennis can an 85-year-old play on an 80 degree day? How many grandchildren can one babysit for one’s children and for how long? See, the numbers just abound.
Age 65 was set the retirement age for Social Security in the United States in 1935. At the time there was some debate between setting age 65 versus 70 as the appropriate age for retirement. Most state pension systems at the time used age 65 although many used 70. Ultimately, 65 was chosen—but that was over 80 years ago. The medical advances in the last 80 years had an astronomically positive effect on life expectancy. And yet here we are today still using the same retirement age.
Interestingly, life expectancy in 1935 in the United States was approximately 60 years for men and 64 years for women. Kind of makes you wonder about the ethics of setting the retirement age at 65, right? Life expectancy today in the United States is approximately age 78. However— and don’t ask me to explain this—if you live to age 65 life expectancy for men jumps to about 83 and for women over 85. And all that was as of 2012. (Note: life expectancy at birth is much lower than at age 65 because of infant mortality, accidents and non-age related disease apparently.)
If you really want to go crazy with numbers, each year that goes by newborn babies are expected to live three months longer over the course of their lifetimes. This rather remarkable extension life expectancy has continued for over 100 years.
If you factor in income, even sharper disparities emerge. People who earn more money tend to live considerably longer. A fascinating New York Times article in 2014 contrasted the suburbs of Washington, D.C., with coal country in West Virginia only 350 miles away. In the wealthy D.C. suburbs, life expectancy averaged approximately 83 years old. In rural West Virginia, the number was approximately 68.
Since most lawyers tend to earn considerably more in their lifetime than the U.S. median, they can expect to live considerably longer. Perhaps Shakespeare is rolling over in his grave. The question remains: When do you retire and what do you do thereafter? And when will you leave for the hereafter?
Law firms and corporate HR departments need to give these issues some serious thought. If you want some more numbers, the average 65-year-old today can walk or run more miles and lift more weight and get through more Pilates classes than the average 65-year-old in 1935. It might be with artificial hips or knees, but our generation, the Baby Boomers, will keep on trucking. So let’s not use 80-year-old thinking about our retirement planning or professional succession planning. It ain’t 1935 anymore.
All of this means that younger law firm Partners and Deputy or Associate General Counsel need to be realistic about their career paths. Mandatory retirement ages need to be reviewed and shared with the next generation of leaders at firms and in corporate legal departments. Consensus and agreement need to be achieved so everyone is on the same page about age. HR, the CEO and GCs need to reflect and decide when they might retire to allow for proper succession planning.
Not a day goes by without me (and my 200+ search consultant colleagues) counseling a more senior candidate that “75 is the new 65.” Work your financial plan based on working to age 75, and while you’re still working, start planning for what you might do in your retirement.