Solo attorneys account for 40% of the total law firms in the United States.

For independent attorneys, retirement planning is crucial to their future financial well-being, but there are additional challenges to going at it on your own. Solo lawyers must take charge of their financial futures without having access to traditional employer benefits, such as a matching 401(k) plan.

Fortunately, there are lots of retirement plans designed specially for self-employed individuals, including Solo 401(k)s and self-directed IRAs.

Whether you’re just starting your practice or nearing retirement age, learn how to build a resilient, tax-efficient plan that supports your long-term personal and professional goals. This attorney retirement guide examines the optimal retirement account options, tax strategies, and investment approaches specifically designed for self-employed lawyers.

Why Early Retirement Planning Is Important for Independent Attorneys

There are many advantages to being an independent attorney, but workplace benefits, like an employer-sponsored attorney retirement plan, are not one of them. Without access to an employer-sponsored plan, a strategic retirement savings plan is essential to long-term financial stability.

Furthermore, starting your retirement plan as soon as possible can help you take advantage of compound interest while preparing for your post-professional years. Whether your goal is to reduce hours later in life, pivot to pro bono work, or exit the practice entirely, initiating a solo 401(K) or SDIRA early in your career can help you transition from a full-time, independent attorney to a greater, financially stronger retiree.

Challenges Independent Attorneys Face in Saving for Retirement

Unlike attorneys at large firms who may benefit from a built-in 401(k) with employer matching or a set-it-and-forget-it pension plan, independent attorneys must navigate retirement savings on their own. This can lead to several challenges, including:

• Inconsistent income. In some cases, monthly earnings can fluctuate depending on client flow, billing cycles and even case outcomes.
• Student loan debt. Seventy-one percent of law school students graduate with debt, with an average law school debt of $130,000. It can take years to pay off student debt, making it challenging for some lawyers to actively contribute to a retirement account, especially one they have to set up.
• Lack of guidance and resources. Attorneys who work for a large firm often benefit from an in-house human resources department, access to predetermined investment tools, and, in some cases, financial advisors. The onus of education and provider analysis falls on the shoulders of already bogged-down independent lawyers.

Setting Financial Goals for Retirement

The best way to start retirement planning is to set measurable goals based on your current financial situation and your retirement objectives. The following tips can help you set reasonable and actionable goals for retirement:

• Estimate how much money you’ll need in retirement, factoring in inflation, healthcare costs, and lifestyle preferences.
• Consider your goal retirement age, noting that withdrawals, especially from earnings, are typically penalized until you reach the age of 59. However, there are exceptions to the rules and variations based on plan structure — e.g., Traditional or Roth accounts.
• Set a contribution schedule. Once you’ve established a financial goal, break that number into an annual savings goal. Using that number and your current income patterns, determine the best way to allocate funds throughout the year.
• Choose the correct retirement account. Generally, you can choose between 401(k)s and IRAs, but there are variations of each, some of which may be better suited for your professional circumstances and savings goals. For instance, a self-directed IRA will enable you to invest in alternative assets that offer higher growth potential. On the other hand, a Solo 401(k) offers significantly higher contribution limits but involves more administrative requirements.
• Leverage online tools, such as a compound interest calculator and consult with advisors to help you tailor the most accurate figure, annual savings, and time frame.

Best Retirement Account Options for Attorneys

Fortunately, independent lawyers and other self-employed individuals have access to several retirement savings vehicles designed specifically for their situation. Here are the best ones worth considering for independent attorneys:

Simplified Employee Pension (SEP) IRA

For solo attorneys looking for a straightforward, low-maintenance retirement account, the SEP IRA is a popular option with relatively high contribution levels.

• Contribution limits are generally up to 20% of 20% of net adjusted self-employment income for independent contractors and freelancers.
• Easy to set up and administer.
• Contributions to Traditional SEP IRAs are tax-deductible, and withdrawals are taxed in retirement.

Solo 401(k)

If you’re self-employed and want the highest contribution limits along with flexibility, a Solo 401(k) might be your best fit. Key features include:

• You can contribute both as an employee ($23,500 in 2025 for ages under 50 or $31,000 for ages 50 and older) and as an employer (up to 25% of net earnings), maxing out at $70,000.
• Available to self-employed individuals with no full-time employees (excluding a spouse).
• Higher contribution limits than SEP IRAs.
• Roth and traditional options are available.
• Requires annual IRS filings if the account exceeds $250,000.

Traditional and Roth IRAs

Both Traditional and Roth IRAs can help you work towards your retirement goals and can serve as a primary retirement vehicle, though annual contribution limits are relatively low. They can also act as a supplement to other plans above. Primary characteristics include:

• Have a base annual contribution limit of $7,000; $8,000 if you are 50 or older.
• Roth accounts have additional limitations based on income and tax-filing status, some of which may reduce your overall contributions or make you ineligible to participate.
• It can be a valuable tool if you have exceeded your annual contribution using other accounts or if you want to maintain multiple retirement accounts. For example, you could max out your 401(k) while still making contributions to an IRA.

Self-Directed IRAs

Independent attorneys with savvy investor knowledge can benefit from the flexibility of a self-directed IRA.

• Invest in alternative assets like real estate, cryptocurrency, and private equity at a tax advantage.
• Structure accounts as a Roth or Traditional IRA tax structure.
• Surprisingly few investor reporting requirements, aside from FMVs of investments.
• Estate planning benefits (if you designate a proper beneficiary).

Tax Considerations and Deductions for Attorneys

Choosing the correct retirement account isn’t just about savings; it’s about maximizing your tax benefits. As such, it’s essential to consider the pros and cons of each type of account alongside your current finances, tax rules and regulations, anticipated annual contributions, employment goals, and retirement expectations.

For instance, contributions to SEP IRAs, Solo 401(k)s, and Traditional IRAs may reduce your taxable income in the current year. Still, you’ll have to pay income tax on qualified withdrawals in retirement. Conversely, while not tax-deductible, Roth contributions allow for tax-free withdrawals during retirement.

Furthermore, self-employed attorneys can also deduct business expenses related to retirement planning, such as financial advisor fees and administrative costs of retirement plans. As such, it’s wise to work with a CPA to choose a plan, optimize deductions and maintain compliance with IRS regulations.

Investment Strategies for Attorneys

Establishing and committing to a sound investment strategy can help you grow your retirement savings while minimizing risk. Consider implementing these tips as you plan and save for your goals.

Diversify

Spread your investments across multiple types of assets. This can include common assets, such as bonds and mutual funds, but it may be worth considering alternative investments.

Alternative assets, such as real estate, cryptocurrency, private equity, and precious metals, are often less influenced by market fluctuations. They can help you build a robust portfolio that hedges against market volatility.

Review your portfolio regularly

Market shifts, new opportunities, or changes in your retirement goals or timeline can all merit a portfolio review and potential modifications. Make it a point to review and complete an annual review of your portfolio with your financial advisor.

Consider your strength

If you have significant experience and legal knowledge, consider investing in private placements or real estate investment opportunities. These types of investments can yield higher earnings than common assets while lending themselves to cyclical investment. For instance, investing in real estate can generate a strong passive income stream that can be reinvested.

Common Pitfalls to Avoid in Retirement Planning

Even the most financially savvy attorneys can make mistakes that affect their retirement planning. Watch out for these common pitfalls, and plan your professional exit strategy.

• Not starting early enough. One of the most significant benefits of any retirement account is the ability to capitalize on compounding interest. The earlier you start, the more you’ll earn, even with modest contributions.
• Underestimating expenses. Retirement often comes with additional costs that you may not anticipate in your 30s, 40s, or 50s. When determining a realistic retirement goal, always account for healthcare and long-term care costs, inflation, and the costs associated with your lifestyle.
• Ignoring estate planning. A comprehensive retirement plan should include a will, power of attorney, and, if you plan to pass your business down, a succession plan.
• Skipping the financial advisor. Financial planners specialize in taking a holistic approach to an individual’s finances and determining the best course of action to help their clients move forward. Not working with a financial advisor may result in blind spots in your financial planning.

FAQs

How much should I save for retirement as an independent attorney?

In general, most financial experts agree that saving at least 15% of your income for retirement is wise, but high earners may want to save more. Consider your current income, retirement timeline, and target annual income in retirement.

Consulting a financial advisor can help you establish a realistic goal tailored to your unique circumstances.

Are there tax benefits for self-employed individuals saving for retirement?

Yes. Contributions to SEP IRAs, Solo 401(k)s, and traditional IRAs are typically tax-deductible, reducing your current taxable income. Roth accounts offer no upfront deduction but allow for tax-free growth and withdrawals.

Self-employed individuals may also be able to deduct administrative expenses and fees related to maintaining these accounts. Please consult a tax advisor for specific tax-related questions regarding your accounts.