Posted on Wednesday, 13th March 2013 by Dennis DampPrint This Post
The Sequester has many feds concerned about furloughs, possibly an extended pay freeze, and fewer resources to get the job done. Retirement applications may also take longer to process if HR specialists are furloughed. The good news is that it isn’t happening overnight and Congress is working to reduce the impact when this kicks in. I recall being furloughed several times for a day or two throughout my career and each time my pay wasn’t docked. That could be different this time around. Another point is that many agencies hold back filling positions throughout the year and use the money saved to purchase end-of-year equipment, supplies, and to pay other expenses. I wasn’t in headquarters or accounting however from my perspective and understanding as a manager this is how the agency paid for many things on their wish list. Especially considering that in most agencies, the lions share — often as high as 85% or more of their budget — is PC and B, payroll, compensation, and benefits.
Since most agencies hold back on staffing at the beginning of the fiscal year they may be able to weather the storm and hopefully there will be minimal impact within your agency. Only time will tell. According to FactCheck.org, “The federal government will spend about $3.55 trillion this year, so $85 billion (in cuts) amounts to about 2.4 percent of all federal spending. But that’s misleading, because large parts of the federal budget are exempt from the sequester cuts — including such “mandatory” programs as Medicaid, Social Security, welfare and food stamps. The sequester cuts are split between defense and nondefense spending. They include cuts to discretionary defense spending (such as weapons purchases and base operations, but not military personnel) and to both discretionary and nondiscretionary domestic programs (everything from airport security to education aid to research grants). Cuts to those programs will be much deeper than 2.3 percent.”
Congress knows that they must address the entitlement and healthcare issues to fend off a budget crisis in the next few years and the sooner they get realistic about their options and alternatives the less impact we will all feel. The longer they hold off making meaningful tax and entitlement reforms the worse off we will all be.
Unlike many state governments the federal government has done its part to reduce employee retirement costs, one of the largest budget items on most lists, and the States should follow suit. They enacted FERS reforms in the 1980s substantially decreasing defined benefit plan payouts and converting to a mix of defined benefit and defined contribution plans utilizing the THRIFT Savings program. They also recently increased FERS contributions for new employees.
Change is always disconcerting especially when you really don’t know what to expect. The best defense is to be prepared as much as possible for the inevitable budget cutting coming to agencies and departments everywhere. This applies to employees and retirees alike. Have a sufficient emergency fund set aside and contingency plans to handle a more austere life for awhile. Some agencies are considering furloughs of one day a week for 20 weeks, some longer. Start economizing now, making sure your emergency fund is sufficient and that you have what you need to get through what may surly be coming your way.
Employees planning on retiring soon should be prepared to live on less than their total estimated annuity since they may have to live with interium checks for extended periods. Stock up on non perishable food supplies that are on sale and look for sales and ways to save wherever you can. It may not be easy but if you start now it will help to lesson your burden if the proposed cuts are eventually implemented.
Recent Forum Host Articles:
- Maui is calling Me – Taking a Winter Break by Nancy Holston
- A Roth IRA’s many Benefits by Paul Risser
- TSP Annual Statements and Highlights by Dennis Damp
- 1099R Statements, Replacement Copies, & Upcoming Changes by Dennis Damp
- IRA Contribution Limits Rise for 2013 by Paul Risser
- TSP Roth Conversion Update by Dennis Damp
Request a FREE Retirement Benefits Summary & Analysis from a local adviser. A sample analysis is available for your review. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections. This service is not affiliated with www.federalretirement.net.
Visit our other informative sites
- Federal Government Jobs & Career Center
- FREE Federal Employee’s Retirement Planning Guide
- Federal Employee’s Career Development & IDP Center
- Post Office Jobs & Career Center
- Job Search – All Sectors
- Environmental Health & Safety Jobs Center
- Nuclear Jobs & Careers – High Paying Jobs
- Stolen Car Plates & Recovery Guide
- Take Charge of Your Federal Career
- The Book of U.S. Government Jobs
Distribute these FREE tools to others that are planning their retirement
- 2013 Excel Leave Chart (target 2013 retirement dates and determine exact leave balances for each date)
- How to be Emotionally and Physically Prepared When You Retire
- How to be Financially Prepared When You Retire
- Master Retiree Contact List (Important contact numbers and information)
- Survivor’s Guide
- Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)
The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.
Last 5 posts by Dennis Damp
- Finally, Good News for Retirees and Savers - March 13th, 2017
- The End Game - Protecting Your Loved Ones - February 12th, 2017
- Retirement Application & Benefit Forms - Don't Make This Mistake! - January 27th, 2017
- 1099 R Statements For 2016 Are Available Now! - January 18th, 2017
- Retirement Moves - Take These Steps Now! - January 13th, 2017
- 2017 Leave calendar and Pay Raise, Then and Now, & Jobs Update - December 16th, 2016
- Retiree Reflections Autumn 2016 - November 30th, 2016
- FEHB Open Season & 2017 Leave Chart Updates – Retiree Jobs - November 17th, 2016
- Ready – Set – Go! FEHB Open Season - November 12th, 2016
- Annuity Calculator - What You Will Have When - October 29th, 2016
- 2017 COLA, Federal Employee's Leave Chart, & Pay Raise - October 23rd, 2016
- FEHB Open Season Update & Best Date to Retire in 2017 - October 14th, 2016
Print This Post