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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
Mary Holmes
October 13, 2013 at 11:57 am

these problems did not just start so stop putting this mess on obama we are having problems and always will until this nation turn back to the only true and living GOD not all these old false made up gods that people are serving that cannot hear, see or talk.

ceci walde
October 13, 2013 at 10:42 am

please stop sending money to other countries. this would not be happening

Bob Houghtaling
October 13, 2013 at 10:21 am

Another Bob

We the people have the power to dump both the DFL and GOP. I plan to vote 3rd party and I hope others will too. This will have to be on hold until elections but we could make our voice heard now by cutting back on our spending, sort of a partial boycott of goods and services - i.e. only buy that which you must to get by and put off "discressionary" spending. If enough do this until a final bugget and final debt limit is set they'll have to start talking to eachother!! Another idea, cut our holiday season spending to half of what we spent last year. These ideas if put into practice would cause big money to tell the 2 parties they own to knock off the show and agree on something. The people need to take charge and act.

john huff
October 13, 2013 at 10:09 am

Know big deal the boomers have been spending money like it was theirs for 40 years.This is agood time to catch up on your sleep,have your heard the saying save for a rainy day,well its starting to sprinkle.

Harold
October 13, 2013 at 9:52 am

I agree with Bob @ Pat and Pam Beasley.
It's not just Congress that caused the budget problems, the Senate Democrat's refuse to work with Congress and the President only complains to the public that it's his way or the highway.

leeingle
October 13, 2013 at 8:15 am

Put my post up.

lee ingle
October 13, 2013 at 8:12 am

I feel that this admins wants civil strife. With civil strife the admins can ask the top court of the land for martial law. It has to be 100% vote to get it. If it happens. The pres will be pres until it is lifted. The only one by law that can lift it is the pres. So there you go. President Field Marshal for Life BO.

Pam Beasley
October 13, 2013 at 7:35 am

I agree with you Bob @ Pat anyone with any common sense should not vote for anyone who now hold Office in the senate or congress and that including the President.But that would take a miracle because people do not learn.

Ken Parker
October 13, 2013 at 7:11 am

I have just about decided to begin a campaign in my church and local community organizations to vote out ALL those currently in office (especially the president). Our reps have forgotten why they are there and who sent them there.
Ken Parker, Easley SC

Bob & Pat
October 13, 2013 at 7:07 am

"We the people" voted these clowns into office. Henceforth anyone that votes for any incumbent (republican, democrat, independent, or illegal alien) shall be known as an IDIOT!!!

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