A looming government shutdown may be scary, but as a retiree you can control your own finances to stay afloat.
For retirees, the possibility of a government shutdown may be concerning, especially as the odds of this happening increase.
Unless Congress passes 12 appropriations bills that fund government operations before Oct. 1 – the start of the new fiscal year – a shutdown will occur. If some of the bills are enacted, a partial shutdown will go into effect.
Retirees may feel the impact in certain ways, but there are a few strategies they can enact now to alleviate concern and protect themselves against potential financial problems.
1. Don’t Worry About Your Social Security Benefits: They’re Protected
The good news is that a government shutdown will not affect the benefits you paid into during your working years. The money you are currently receiving on a monthly basis will continue as normal.
According to the U.S. Department of the Treasury, Social Security benefits are considered mandatory spending, and the Social Security Act of 1935 requires the U.S. government to provide payments to beneficiaries. So, if you count on Social Security benefits to pay your bills, you can relax.
Although your Social Security checks (as well as Medicare benefits) will continue uninterrupted, the Committee for a Responsible Federal Budget reports that benefit verification and card issuance would stop until the shutdown is over, meaning it’s not a good time to apply for benefits.
Another concern you may have is what a government shutdown might do to your other sources of income, such as a pension or IRA. Again, you should be fine.
“As long as you’re properly invested, you have very little to worry about,” says Craig Richman, private wealth advisor at Richman Capital Management in Boca Raton, Florida. “These income sources have nothing to do with a government shutdown.”
2. Refine Your Spending
Even if a shutdown doesn’t affect your finances directly, it can impact the economy. During the five-week partial government shutdown that ended in January 2019, the Congressional Budget Office estimated that the reduced economic output was $11 billion in the two quarters that followed.
While lengthy shutdowns don’t directly impact private businesses and nonfederal employees, a slowed economy can create economic uncertainty and impact citizens outside of those industries.
This is the perfect opportunity to evaluate your expenses for the next few months and scale back where you can, says William Bevins, a certified financial planner from the Nashville, Tennessee, metro area.
“This might be a great excuse to break out the books and cut back a bit to increase cash flow,” Bevins says. “Look at your emergency fund and determine if it’s sufficient. As a retiree, you may be planning an expensive trip or a car purchase in the near future but you may want to put it off until the shutdown – if it happens – ends.”
3. Check With Loved Ones Who Work in Government Service
Your income sources may be stable, but what happens if you have adult children or friends who work for the federal government? In the event of a shutdown, they may not receive paychecks until the situation is resolved.
Myriad workers would be impacted, including members of the armed forces, politicians, judges, public health workers, air traffic controllers and transportation security officers.
“If your children don’t have the financial resources to make it through the shutdown without an income, you may be called upon to help,” Richman says.
So, if you think your children or loved ones will be in a financial pinch, initiate a candid talk now because they’ll likely be worried about how they’ll meet their expenses.
“These are difficult conversations to have with someone, but you really should do it,” Richman says. “Ask them if they have a budget, how much they have saved and at what point they would need your financial assistance.”
If they’ll need help getting by and you’re prepared to offer a financial gift or a loan, talk about what you can do. It can alleviate a lot of stress during a tough time.
4. Focus on What You Can Control
If Congress can’t identify a mutually agreed-upon path forward, there will be at least a partial shutdown. And if it does move forward, it’s hard to gauge how long it will last.
If it happens, concentrate on your personal economics. Your income sources should be secure, but if you’re going to step in and assist loved ones who aren’t receiving a paycheck, consider your approach and capabilities. And if you cut down on your own spending and delay major purchases until the government finds common ground, you’ll be in a better position when that time comes.
https://money.usnews.com/money/retirement/articles/tips-for-retirees-in-a-government-shutdown
