Navigating through a government shutdown can be a daunting task, especially for retirees who might be on a fixed income. A government shutdown will transpire if Congress doesn’t pass the necessary appropriations bills to fund government operations by October 1, marking the onset of a new fiscal year. Even a partial enactment of these bills can lead to a partial shutdown, which can have far-reaching effects. A shutdown will affect you at some point.
Here are some strategies retirees can employ to navigate through a government shutdown with minimal financial distress:
#1 Rest Easy Regarding Social Security Benefits:
- Your Social Security benefits are safe during a government shutdown. The funds you’ve contributed over your working years will continue to be disbursed to you monthly as usual.
- The U.S. Department of the Treasury categorizes Social Security benefits as mandatory spending, and the Social Security Act of 1935 mandates the government to make payments to beneficiaries.
- Although the disbursement of Social Security and Medicare benefits remains uninterrupted, it’s worth noting that the process of benefit verification and card issuance will be on pause until the shutdown ends, making it a less favorable time to apply for benefits. Additionally, you may experience long delays by phone or in person as the government is asking employees to work without pay for the duration of the shutdown. The government does issue back payments for those hours; nevertheless, the uncertainty of when employees will get paid makes it difficult to maintain staff.
#2 Re-evaluate Your Spending:
- Although a shutdown may not directly affect your finances, it can have a ripple effect on the economy. For instance, the five-week partial government shutdown that ended in January 2019 resulted in an estimated $11 billion reduction in economic output over the subsequent two quarters.
- This scenario presents a good opportunity to scrutinize your expenses for the upcoming months and trim down where possible. Assess your emergency fund to ensure it’s robust, and consider postponing major purchases or expensive trips until the shutdown is over and the economic landscape is more stable.
#3 Communicate with Family Members in Government Service:
- While your income may remain stable, family members or friends employed by the federal government could face financial challenges if a shutdown halts their paychecks.
- Engage in open discussions with them to understand their financial standing and ascertain at what point they might require your assistance.
- If you’re in a position to offer financial help, whether as a gift or a loan, having these conversations in advance can alleviate stress and foster a supportive environment during challenging times.
#4 Focus on Manageable Aspects:
- The length and breadth of a government shutdown are unpredictable and beyond personal control. Nonetheless, honing in on personal financial stewardship and maintaining open communication channels with loved ones can provide a semblance of control amidst the uncertainties a shutdown may usher.
By adhering to these strategies, retirees can arm themselves better to face the financial nuances of a government shutdown, ensuring a semblance of peace and financial steadiness during such unpredictable scenarios. Through prudent planning and open communication, navigating a government shutdown can be less intimidating and more manageable.
Related articles:
Are You Earning Enough to Get the Maximum Social Security Payout? Find Out Now
How Social Security Spousal Benefits Work And What You Should Know
Uncovering Forgotten Treasures: How to Reclaiming Unclaimed Retirement Benefits