How a 50-Year-Old Plaintiff Attorney Creates Tax-Free Retirement Income with Attorney feeSaver™
This case example is for illustrative purposes only. Actual results vary based on each attorney’s age, health, income, firm structure, funding strategy, tax assumptions, and plan design.
Meet John: A 50-Year-Old Plaintiff Attorney
John is a 50-year-old plaintiff attorney in his peak earning years. He has built a successful practice, continues to generate substantial contingency fees, and is beginning to think seriously about what retirement could look like.
After years of paying significant taxes on high-income fee years, John wants a more efficient way to use his legal fees. He is not just looking to defer income. He wants to reduce current tax exposure, build a more predictable retirement income stream, and create additional protection for his family.
John’s goal is to begin lifetime income at age 62. That gives him a 12-year planning window from the start of the Attorney feeSaver™ program before income begins.
Attorney feeSaver™ Outcome
With Attorney feeSaver™, John defers an average of $150,000 per year for 10 years, for a total of $1.5 million in deferred fees. He plans to begin receiving lifetime income at age 62.
Using Attorney feeSaver™, John receives:
That’s a total of $12,867,158 in after-tax benefits
Comparing Traditional Tax Planning Options
Option 1: Taking the Fees as a Lump Sum
If John takes the fees as a lump sum, pays taxes, and invests what remains, the immediate tax cost significantly reduces the amount available to grow.
In this example, the lump sum approach produces:
This approach gives John immediate access to the money, but it also creates substantial tax drag. For an attorney in his peak earning years, taking the full amount as taxable income can reduce long-term retirement flexibility and leave less capital available for future income planning.
Option 2: Structured Settlement Annuity
A structured settlement annuity can help defer taxes and create a predictable future income stream. For some attorneys, this may be a useful planning tool. However, the primary benefit is generally tax deferral, not tax elimination.
In this example, the structured settlement annuity approach produces:
Compared to taking a lump sum, this strategy improves the long-term income result. But John’s future distributions are still taxable, and the strategy does not provide the same projected tax-free death benefit available through Attorney feeSaver™.
Option 3: Deferred Compensation Plan
A deferred compensation plan with market-based performance may provide more growth potential than a fixed-rate annuity. However, future distributions are still generally taxed as ordinary income.
In this example, the deferred compensation approach produces:
This option may create more after-tax income than a lump sum or fixed-rate deferral, but the tax issue remains. John still owes taxes when income is received, and future tax rates could affect his actual net income.
The Attorney feeSaver™ Difference
Attorney feeSaver™ changes the comparison in two major ways: it is designed to create tax-free lifetime income and provide a tax-free death benefit for John’s family.
Annual Tax-Free Income
With Attorney feeSaver™, John receives $255,600 per year in tax-free income beginning at age 62 and continuing through age 90 — effectively for the rest of his life based on this case example.
That compares to
This is the core income difference. Traditional strategies may help John defer taxes or invest after-tax dollars, but his future income is still reduced by taxation. Attorney feeSaver™ is designed to help him create a materially larger annual income stream without future income taxes reducing each payment.
Tax-Free Death Benefit for Family Protection
Attorney feeSaver™ also provides John with a projected $5,710,358 tax-free death benefit, assuming death at age 90.
That death benefit is a major distinction from the traditional strategies shown in this comparison. The lump sum, structured settlement annuity, and deferred compensation approaches focus primarily on income or investment value. Attorney feeSaver™ adds a legacy and family protection component, helping John use his legal fees not only to create income during life, but also to provide a substantial tax-free benefit for his loved ones.
When John’s projected $7,156,800 in tax-free lifetime income is combined with the projected $5,710,358 tax-free death benefit, Attorney feeSaver™ produces $12,867,158 in total after-tax benefits.
Why Attorney feeSaver™ Is Valuable for Attorneys in Their 50s
For attorneys in their 50s, the planning window is different than it is for attorneys in their 30s and 40s. John may still have several high-income years ahead of him, but retirement is close enough that tax planning and income planning need to work together.
Traditional fee deferral strategies can help smooth taxable income, but they generally create future taxable distributions. That may be helpful, but it does not fully solve the problem for an attorney who wants greater retirement income, more tax certainty, and family protection.
Attorney feeSaver™ is designed to go further by combining attorney fee deferral with executive benefit planning. For John, the strategy helps convert today’s contingency fee income into future tax-free income while also creating a projected death benefit for his family.
Could Attorney feeSaver™ Work for You?
This case example shows what may be possible for a 50-year-old plaintiff attorney with substantial income, the right ownership structure, good health, and a clear retirement income goal.
Every attorney’s situation is different. Your actual projection will depend on your age, income, health, firm structure, fee timing, funding strategy, tax assumptions, and planning goals.
To see what Attorney feeSaver™ could look like for your situation, schedule a consultation.
Disclaimer
This case study is a hypothetical example provided for illustrative purposes only. John is not a real attorney, and the figures shown do not represent the results of any individual attorney or law firm. Projections are based on assumptions regarding age, health, funding, plan design, tax treatment, income timing, and other factors. Actual results may be higher or lower and will vary based on each attorney’s specific facts and circumstances. Attorney feeSaver™ does not provide legal, tax, investment, or accounting advice. Attorneys should consult their own tax, legal, financial, and insurance advisors before implementing any planning strategy.