Set aside three months’ worth of expenses in an easily accessible account to tide you over in case of an emergency. Image: Ariya J/Shutterstock.com
By: John GrobeIn early December I read an article in the Hilton Head Sun (one of those free monthly papers) with the title “Insufficient Savings Leads to Mental Stress”. The article stated that, due to a lack of emergency savings, almost half of Americans have had to turn to payday lenders for quick cash. That got me thinking of a few ways that federal employees are better off than the vast majority of Americans.
Federal employees and retirees have lots of things going for us:
· We are fairly compensated and better off than the average American worker.
· We have a defined benefit pension (FERS) that will help us make ends meet when we retire.
· We have the Thrift Savings Plan and a generous employer matching contribution.
· We have far more job security than the average American worker. Civil Service protections protect us from arbitrary personnel actions and provide strict RIF procedures if there’s a downsizing.
Then I thought about the lengthy government shutdown in 2018-2019. There were articles in major media sources about furloughed federal employees starting dog walking businesses and holding garage sales to make ends meet. After the fact, the TSP reported a dramatic uptick in the number of employees who took hardship withdrawals from the plan.
Maybe we’re not as financially robust as we should be. We should not be so financially fragile that thirty+ days without a paycheck (knowing that we would be paid eventually) should cause us to panic.
Set aside three months’ worth of expenses in an easily accessible account to tide you over in case of an emergency. A visit to bankrate.com on December 16th showed many FDIC insured, low or no minimum balance savings accounts with an interest rate in the vicinity of 5% (some were higher, some were lower). The last thing a federal employee should be doing is applying for a payday loan!
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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See also,
Calculating Service Credit for Sick Leave At Retirement
FERS Supplement vs The 10% Pension Bonus
How Your FERS, Social Security and TSP Payments Get Taxed
