Locums in Retirement Is Not ‘Working’

In my first post on The White Coat Investor as a columnist, I detailed our retirement drawdown strategy. In that piece, I mentioned that, if an unexpected cost came up, we could adjust our budget, or I could do a locum job or two. A couple of comments pushed back on that, suggesting that the costs associated with maintaining credentials to do a locum were too great or that doing a locum would constitute “work” and so I wasn’t really retiring.

This is my effort to give clarity on this issue for others who are interested in retiring relatively young.

First, we have to address the Internet Retirement Police. Back in 2013, Mr. Money Mustache called out the myriad of people who said that, if you do anything for money, you’re not really retired and that calling yourself retired was disingenuous. There is an implication that, if you earn money after leaving your full-time job, you didn’t run your numbers correctly and, therefore, anyone else who wants to retire shouldn’t, because they can’t afford it. These people are fearful or naysayers or those who have a traditional perspective on retirement. I’m not going to argue with the Internet Retirement Police.

For everyone else—those who are curious and want to learn more—I write this column to you.

Why Locums Isn't Like a Full-Time Job

Doing a locum is basically a paid vacation. I most commonly do locum gigs of 2-3 weeks. Yes, I have to go to the hospital to manage cases and teach. Yes, I have on-call responsibilities. But I always bring my wife with me, and it’s almost always somewhere interesting or different—like Minneapolis or Saskatoon. Because of on-call responsibilities, we can’t take an hour-long boat tour or drive far away for a hike, but we can explore the local area easily enough. My wife has been using my locums for the past few years as retirement practice, and she’s learned exactly how to fill her days with engagement and meaning.

The experience of doing a locum differs substantially from my full-time job as a professor of veterinary anesthesia in the following ways.

1. No administrative responsibilities: During locums, I’m not on committees that require me to read grant applications or deal with patient safety problems. I’m not on search committees with no applicants that involve sending out letters and emails to anyone who might possibly be interested. I don’t have to attend department or section meetings. I don’t have to try to schedule other committee members for a meeting because I’m the chair and that’s a lot of what the chair does. I don’t have to promote faculty development opportunities. I show up, I help patients and students, and I go home.
2. No resident responsibilities: Yes, I may teach residents on clinic duty, but residents take up so much time other than clinical teaching. It's reading all of the applications, conducting interviews and doing the ranking, going to journal club, choosing articles to present, and teaching their higher-level classes. Most of them are inexperienced researchers, and many of our residents have English as a second language. The amount of time and energy to mentor them through their research projects was substantial.
3. No classroom or laboratory teaching: Although the workload is shared well, taking most of your afternoon to supervise students in the surgery lab is a real drag on productive time. Writing lectures, delivering lectures, writing exam questions, and dealing with student accommodations takes time, and, more importantly, it's emotionally draining.
   
4. No research responsibilities: Although I thoroughly enjoy doing research, the vast majority of my work these days is supervising mentees—students, grad students, residents, and junior faculty members. That is rewarding on its own, but I’m not sure I would do that if it weren't a requirement. I would probably conduct my own research projects on my own time, but taking care of everyone else’s projects is largely a collegial responsibility.
5. Independence: My full-time job does not really allow for a part-time option. Even if it did, we want to live somewhere other than where my full-time job is. We can retire and move to our preferred residence, and then I can fly out to locums when I am interested. It’s a way to step down your full-time work if your job doesn’t allow for a part-time option.

More information here:

Locum Tenens: What Physicians Need to Know

How to Get Locums Work Without a Locums Agency

The Financial Benefits of Locums?

For me, a locum is not like doing full-time work. In addition, depending on your discipline, it may be more lucrative. In my field, we usually get between $5,000-$8,000 a week on locum. If you multiply the bottom of the range by 49 weeks, you have $245,000, which is about $50,000 more than I was earning working a full-time job. Of course, that would require your schedule to line up perfectly for multiple locums, which is unlikely in my discipline.

We also need to look at the impact of earning extra income on your Financial Independence Retire Early (FIRE) finances. If I do just two weeks of locums a year ($10,000) for 30 years, it’s as if I had an extra $350,000 of invested assets (based on a 3.5% withdrawal rate). How long would I have had to work to earn that additional $350,000? Assuming our historical savings rate of about 50%, I would have had to work another 24 months. So, in return for 2 weeks × 30 years = 15 months of lifetime work, I could retire 24 months earlier. Now, it’s unlikely I will want to be doing locums into my 70s, but the point is that earning additional income after retiring from full-time work can have a substantial positive impact on your bottom line.

Let’s look at a more realistic scenario.

Currently, using the Rich, Dead, or Broke data, I have a 98% chance of being dead at 97 (a 50-year retirement). Using Big ERN’s SWR toolkit, a 4% withdrawal rate gives an 8% failure risk. Assuming I do two weeks of locums a year for $10,000, taxes and other costs end up being $3,000, and I do this for the first five years of retirement, how much impact does that have? The 8% withdrawal rate failure risk goes down to 4.8%. That means for 10 weeks of “work,” which is largely engaging and enjoyable for me, my chance of being broke is reduced by 40%. Maybe that’s worth it to you, maybe it’s not. But it’s wise to run the numbers. We’ve decided it’s worth it to us.

Another financial benefit from doing locum work in retirement is keeping your taxes low. Since you are running a business, you can now deduct expenses associated with it, including your maintenance of specialty certification, continuing education expenses, and—most importantly—health insurance premiums. Even though you have earned income, you may not have to pay any more in taxes.

More information here:

Lessons Learned from Achieving Financial Independence

Retirement Income Strategies — And Here’s Our Plan for When We FIRE

Keeping Up Your Skills with Locums

Doing locums work also allows you to maintain your clinical skills. This will vary by industry or specialty. But maintaining some clinical skills may be worthwhile if you decide you want to take on a full-time job again or if something drastic happens requiring you to go back to full-time work. This won’t hold true for decades of only doing a few weeks of locums a year, but, for a few years after leaving full-time work, keeping some skills may be helpful. Furthermore, it keeps me somewhat plugged in to my industry and aware of changes that I may want to be aware of for my own purposes (e.g., my pets’ care).

The other great potential opportunity, at least in my field, is to do a longer locum in a distant land. Every now and then, locums for 3-9 months (usually to cover parental leave) come up overseas, such as in New Zealand and the UK. Not having a full-time job allows the chance to spend a longer period of time in another country, which could be a fun adventure.

 

I don’t consider doing some work in retirement being “not retired.” The point of leaving full-time work is to spend more of your time how you want, but it doesn’t mean spending every minute doing nothing. In fact, having time for more and longer locums is a motivation for my retirement. I believe locums work is dramatically different from my full-time job, and I am happy doing a locum here and there to get a “paid vacation.” I don’t consider doing a locum or two to help pay for a roof repair to be a catastrophic failure of retirement.

If your vision of retirement is to sit on the beach and slurp down tiki drinks all day every day, that’s great. If you want so much money that you will have a sub-2% withdrawal rate, that’s great. Personal finance is personal, so everyone’s decision has to be unique to them. We decided we would rather stop full-time work relatively young and have a very comfortable lifestyle rather than continue to hoard money.

Do you consider locums work to be on the same level as a full-time job? Would you participate in locums even if you're retired? Why or why not?