Locums Retirement Planning

Doctor checking health of piggy bank savings
Cross Country Locums
October 16, 2020 17:18 PM (GMT-04:00)
Provider Tips
Life moves fast. That’s why it’s critical to plan for retirement now – especially when you’re a locums physician or advanced practice provider.
When you choose the locums lifestyle, you can enjoy practice autonomy, competitive compensation, and a flexible schedule. You can care for patient populations who need you most. You can even pair work with travel and see the country as you work. In return, however, you must take the reins when it comes to specific financial tasks like paying quarterly taxes—and like setting yourself up for a comfortable retirement. 

Locums Retirement Planning Tips

While planning for your retirement may take a bit of time now, you’ll find the investment is worthwhile. Here are some tips for building wealth over the long term as a locum tenens provider.
  1. Work with a financial planner. First things first: hire help. Make it easy on yourself and outsource your financial planning. Partner with an experienced professional who specializes in advising clinicians. If you ask other locums in your network for referrals, you may discover a financial planner who advises locums tenens independent contractors. A financial planner can help you determine how much you will need to retire comfortably, what you should be saving now, and which retirement savings accounts are best for your situation. They can also advise on college savings for kids, insurance, and tax and estate planning.
  2. Set up retirement accounts. Permanent providers who are employees of public or private healthcare organizations may have access to government- or employer-sponsored retirement plans such as 401(k)s or pension plans. Locums providers, on the other hand (especially those who are independent contractors), must use alternative means to save for retirement, and setting these up may take some time. Ask your financial advisor about your options, which may include tax-advantaged investment accounts such as SEP-IRA, Roth IRA, Back-Door Roth IRA, Traditional IRA, Defined Benefit Plan, or Solo 401(k). There are also other ways to set aside money and reduce your tax burden, including Health Savings Accounts and 529 College Savings Plans.
  3. Save, save, save. Seasoned providers can appreciate the importance of savings as retirement gets closer and closer. For newer professionals, however, it may be harder to envisage retirement ever arriving, and the temptation to splurge may overcome the goal to save. However, taking the initial time to set up retirement savings accounts with the help of a financial advisor and then setting up periodic withdrawals to make retirement contributions will pay great dividends. That way, the emotional component is removed from the equation – and savings becomes automatic.
  4. Pay down debt. Paying off college and med school loans quickly can translate to significant savings over the long run—money you could be packing into retirement investments, which could be earning dividends and growing in value over the long run. If possible, avoid postponing student loan payments because interest accrued during deferment or forbearance can come back to bite you. It can add up fast! If feel burdened by school loans or want to streamline your process for paying them back, consider income-driven repayment options, loan forgiveness programs, consolidation, or refinancing. 
Take time to plan for your retirement. That way, you’ll be able to focus on enjoying your experience as a locum tenens provider now, and you’ll be set up for financial success so you can comfortably retire and fully relax in the future.

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