Two point one million dollars one year. Five hundred twenty thousand the year before that. Three hundred eighty thousand the year before that. That is one plaintiff’s attorney in his mid-forties running a small contingency firm, with roughly $4.5 million invested and about a year of expenses in cash. Case costs come out of the operating account. Spending drifts upward in the good years. He has no real sense of what a normal year looks like, and he has no intention of ever retiring.
He asked for a system instead of a set of reactions. That is the right request, and the system for lumpy income looks nothing like the one most planning content assumes.
Normal Does Not Exist, So Stop Planning Around It
Your financial life is not very Googleable. Every article assumes a salary, a savings rate, and a retirement date, and none of those three describe you. In your case, volatility is the normal condition. It shows up in cash coming in and in cash going out, and it is not a flaw in your behavior.
I am also not going to tell you to hold spending flat across a $380,000 year and a $2.1 million year. That advice ignores how people actually work. It is the money in your pocket problem: walk into a store with cash on you and you are more likely to spend it.
Your Expenses Change Less Than You Think
Here is what I would expect to find if you pulled three years of statements side by side. Housing, food, fuel, cars, insurance, and the rest of the ordinary machinery of your life are remarkably stable.
What moves is the discretionary layer. The trip you took the year you brought home $2.1 million looked nothing like the trip you took the year you brought home $380,000, and somewhere in the big year there is probably a boat or its equivalent. That purchase is not an annual expense, so strip it out. Once you remove the one-time items, a baseline emerges, and it is usually lower and steadier than people expect.
Pick a Good Year, Then Fund Two of Them
With that baseline in hand, ask a different question: which of these years did you actually enjoy living? Not the lean year where you passed on things you wanted, and not the boat year either. Pick a good, normal year. Suppose that number is around $500,000 of spending.
Now take two years of that and put it in cash and Treasury bills. I know how that sounds when you have $4.5 million invested and someone suggests parking a million and a half in T-bills. Do it anyway, and the reason has nothing to do with your forecast for the market.
Your Highest ROI Has Nothing to Do With the Market
Your income is the engine here. A single good year can add more to your balance sheet than a strong year in your portfolio, which means your highest return on effort is your human capital, not your asset allocation. Anything that pulls your attention away from winning cases is expensive in a way a spreadsheet will not show you.
That cash reserve buys attention. It means you can invest in a case, wait out a long timeline, and still take the vacation you planned, without market headlines or a slow quarter creeping into decisions about your practice. It is not a drag on returns. It is what lets the rest of the portfolio be left alone.
Planning Without a Finish Line
You said you never plan to retire, and you are right that most planning assumes otherwise. Very few of the people we work with actually stop. They like the game.
So I want you to have the option without building the plan around it. Run the rough math. At $4.5 million in your mid-forties, with markets roughly doubling every decade on average, you are near $9 million in your mid-fifties and $18 million in your mid-sixties, without contributing another dollar. By your seventies the number is absurd.
Which reframes what your income is for. In a $2 million year, you can spend it. Genuinely. The compounding is already handled.
The Only Thing That Breaks This Plan
There is one real risk, and it is not a bear market. It is you being unable to earn the way you earn now, whether through a dry stretch of cases, a health event, or a problem at the firm. Everything above exists to absorb that.
So two guardrails. Keep the balance sheet light on debt, because fixed payments are exactly what a $380,000 year cannot absorb. And when you spend a windfall, watch whether the purchase adds recurring cost. A boat is a great year’s purchase. A portfolio of real estate with operating expenses, management, and carrying costs quietly raises your baseline forever, and the lean year that used to be uncomfortable becomes unfundable.
Test every big decision against a bad year rather than a good one. If a $380,000 year is tight but survivable, you are built correctly, and you are free to go do the thing you are best at.
This post is adapted from a recent episode of the Scholar Wealth Podcast. For more perspective on building a system around volatile income, listen to the full podcast episode here.