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How shutdown affects retirement

By Jennie L. Phipps · Bankrate.com
Tuesday, October 1, 2013
Posted: 7 pm ET

If the federal shutdown persists, your retirement and even your retirement planning could be affected. Here's why.

Social Security. These payments are part of the mandatory budget. "In the original authorizing legislation, there is no provision for the federal government or Congress to deny these payments," says Jay Ryu, associate professor of public finance and budgeting at Ohio University. The offices are remaining open, but about one-third of all Social Security employees will be furloughed. That could slow down paperwork, applications and processing, Ryu predicts.

Medicare and Medicaid. These two programs are also mostly off the table, although Medicare may be subjected to some automatic, across-the-board reductions, Ryu says, thanks to the Budget Control Act of 2011, which was enacted as a compromise to end that debt ceiling crisis.

Federal retirement benefits. Federal retirement annuity payments will continue to be paid on time, the National Active and Retired Federal Employees Association, or NARFE, assures its membership. Also unaffected are life, health and long-term care benefits. NARFE does warn that government paperwork will be slowed.

Veterans Affairs retirement benefits. Veterans Health Administration hospitals and health care facilities remain open and operating, but the U.S. Department of Veterans Affairs put out a statement warning, "Claims processing and payments in the compensation, pension, education and vocational rehabilitation programs are anticipated to continue through late October. However, in the event of a prolonged shutdown, claims processing and payments in these programs would be suspended when available funding is exhausted."

Your 401(k) and other retirement savings accounts. This disruption could put a big damper on stock prices and investment returns, eating into retirement security.

This government shutdown is a prelude to a bigger problem -- that of the debt limit. A breach of the debt limit would cause havoc, and possible economic collapse could result if our country doesn't pay its bills.

"The 'full faith and credit of the United States government' is absolutely the most valuable economic asset we have," says Gerald Epstein, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts Amherst. "It is the center of the world financial system. It allows us to borrow money at lower rates than any other government. Global faith in the credit of the United States is worth trillions of dollars to U.S. taxpayers and investors. Allowing our politicians to throw that away is liked flushing those trillions down the drain."

Tell your congressman you can't afford this and to get these issues resolved quickly.

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83 Comments
Bonnie Baim
October 13, 2013 at 6:16 am

If I did not do my job I would very quickly be fired-Why do we as a so called free nation allow this type of Hostage situation by our government? These people should all be fired and we should start over with people who know what the common working man/woman has to go through every day and how hard most of us work to just survive.

rene
October 13, 2013 at 4:30 am

all people connected with this mess in the white house is a disgrace,so if they don't reach a comprise ss checks won't go out what ya want to bet Mrs. obama's mom gets hers. an when its time for a raise all the crooks in the white house get a nice one, make them all live on 23000.00 a yr. an we'll ahve plenty of money. Its funn y they want to stop ss checks yet the tax is still deducted from everyones pay while this shutdowns going on.They'll care about the American people come election time,yet our voye DOES NOT count the electorial vote counts whic is the person with the most money wins the race. fire them all start from fresh. Physcially CLEAN HOUSE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Steve
October 13, 2013 at 3:30 am

If federal shipyard workers are told to report to work, but are and will not be paid until this "SHUTDOWN" is resolve, than why are these people in congress being paid????????What makes these people (in congress) better than the nuts and bolts people who keep our country out of harms way????

ron jay
October 13, 2013 at 2:40 am

i'm 64 years old and I've never voted in my intire life, a fact i'm not proud to admit to. the reason why I've never voted is because it doesn't matter who we have in office at any given time it never seems to get any better. all any of our politicians ever seem to care about is their own self-centered ego's. it's not hard to make most of our problems at least a little better if we all work together most of the time. if the elected people in washington can't work out their differences and do a better job of making all of our problems better the pay checks they use to pay their bills with just need to be stopped being given to them. stop paying these bozo's for doing a terrible job and maybe they will start working together for the good of our once proud country. I know it's just about impossible to please everybody all of the time but just look how bad a job our government did with all of the money they made disappear instead of using it to help improve the American economy. I was taught growing up that if you do a bad job you don't deserve to get a full paycheck. I believe in giving every person working more than one chance to get the job done right but how many chances do our politicians need before they start remembering they are suppose to be,for the people by the people. without them working together to solve as many of our problems as they can while they are in office then why keep paying them for doing a lousy job. right now there shouldn't be a smile on a single persons face that is suppose to be working for the good of every American that is the American economy.

janice
October 13, 2013 at 2:30 am

The time to remember all this is at the polls. I have talked to hundreds of people about this shutdown and they have talked to hundreds and when it is time to vote....all the incumbents are in for a rude awakening. Live like we have to live from pay to pay and you would see how hard it is.You don't care cause you all have your big paychecks and all your good pensions and perks and healthcare. Have that all taken away and see how hard it is to live.

michaek risola
October 13, 2013 at 1:21 am

If congress and the house of rep. were not being paid you could bet this would all be over with. I'm the last of the baby bumers and when Regan was in office he raised the debt ceiling 8 times and we NEVER heard or has this kind of baby's in office. We as the American ppl. should vote in ALL NEW people. This is a discrace to are country.

BJ PHILLIPS
October 12, 2013 at 10:44 pm

why are you turning your back's on the American people? we are the one's that deposit, your paycheck, why not try and work with our president, to make America what it should be.THE HOME OF THE BRAVE! AND NOT THE HOME OF THE HUNGER, AND FRIGHTENED. LOVE BJ PHILLIPS

Paul
October 12, 2013 at 9:17 pm

There was a great man in history that once said "I just don't know about these kids today. who was it, President GEORGE WASHINGTON.

MARY GOLDBERG
October 12, 2013 at 7:40 pm

Please open up our government and work harder together.

RUTH GRIFFIN
October 12, 2013 at 7:22 pm

pLEASE PRAY AND WORK TOGETHER,GOD IS ABLE.

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