Federal workers dipping into retirement funds as shutdown continues
As the partial government shutdown stretched into its fourth week, officially becoming the longest in U.S. history, a growing number of furloughed workers are beginning to feel the financial pain.
Last week, hundreds of thousands of government workers missed their first paychecks as a result of a funding lapse that started on Dec. 22. Now, some are beginning to dip into their retirement funds to make ends meet.
According to Bloomberg, data from the Federal Retirement Thrift Investment Board reveals a 34 percent jump in the number of hardship withdrawals in the two-and-a-half weeks after Christmas, compared to the year-ago period. The data goes through Jan. 14, which is after the Friday that most workers missed their normal paycheck.
In order for employees to withdraw from their account, their financial hardship has to be a result of at least one of the four conditions: Recurring negative monthly cash flow; medical expenses that are not covered by insurance; personal casualty losses; or legal expenses.
Workers are not allowed to withdraw less than $1,000 from the account and can only draw from their own contributions (in addition to any contributions they’ve accrued).
It’s not uncommon for workers to turn to their retirement funds during shutdowns.
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Bloomberg reported that in October 2013, when the government shutdown under former President Barack Obama, about 14,000 plan participants took a hardship withdrawal (at 16 days, that shutdown is the third-longest in history). That year also ended with a decade-high number of loans and such withdrawals.
Furloughed workers -- there’s about 800,000 -- don’t get paid when the government is shut down, but will receive back pay once things are up and running again. Meanwhile, members of Congress will continue getting paid because they are not subject to the furlough, although some have said they’ll forgo their pay as a sign of solidarity.