Locum tenens: Your path to early retirement

Sophia Khawly, ARNP, MSN, a veteran locum tenens nurse practitioner, offers expert guidance on building savings and planning for early retirement.

Locum tenens is more than a flexible way to practice medicine—it can also be a path to financial independence. With higher pay, covered expenses, and tax advantages, locum tenens work allows clinicians to save more money and potentially retire years ahead of schedule.

Reduce fixed costs through provided housing

When you work locum tenens, housing is typically provided, which is often a furnished apartment or home. For those working locums full-time, maintaining a separate residence back home usually isn’t necessary, except for establishing a permanent address for tax purposes.

By giving up your personal home and relying on the housing provided during assignments, you can eliminate nearly 30% of your monthly expenses. The money you save can go toward savings or investments. To maintain your home residency, you might choose to rent a room from someone else, stay with relatives, or downsize to a smaller, more affordable space.

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Eliminate the need for a personal vehicle

Another major expense you can reduce through locum tenens work is car ownership. While on assignment, locum providers are typically given a rental car, which can be used for the entire duration of the assignment, including weekends and days off. This eliminates the need to maintain your own vehicle. If you lease a car, you can return it when the lease ends; if you own one, consider selling it instead.

When you return home between assignments, you can rent a personal car using rewards or points earned from your work rentals. Cars have become increasingly expensive in recent years due to factors like higher manufacturing costs and limited inventory, so eliminating a car payment can significantly boost your savings. With the average added costs of insurance, maintenance, and registration, going without a personal vehicle can free up substantial money to invest toward long-term goals like retirement.

Optimize pay and tax benefits

As a locum, your pay is significantly higher than working as a permanent provider. Locum providers may possibly make 30-50% more than they did at their previous permanent role. Additionally, if you work as a 1099 contractor, you can deduct many of your expenses from your taxes, including licensing costs, travel related to your assignment, and health insurance.

You can also deduct 50% of your meal expenses while working away from home. Food is typically the third-largest monthly expense for most Americans, so this deduction can add up quickly. By writing off half of your meal costs while on assignment, you can significantly reduce your overall spending and keep more of your income.

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Invest strategically to accelerate retirement

By saving on housing, car expenses, food, and taxes, locum tenens providers can potentially keep 50% or more of their income. These savings can then be invested to accelerate your path to retirement. Some agencies that employ advanced practice locum providers as W-2 employees may offer a 401(k) plan, sometimes with matching contributions. If you work as a 1099 contractor, consider opening a solo 401(k) to maximize contributions both as the employee and the employer.

A flexible transition to retirement

If you are not ready to retire, you may want to consider continuing to work in locum tenens as needed. Many clinicians semi-retire, in which they practice medicine part-time or per diem, to allow themselves to transition into retirement gradually. Locum tenens can definitely fast-track your path to retirement.