Katherine Liola, CFP The impact of being furloughed goes deeper than finances, advisor Katherine Liola says.

Less than a block from the White House, Raymond James advisor Michael Feeley is in the eye of the storm during the current government shutdown.

With it likely that many federal workers will not be paid on Friday, the employee advisor has been fielding plenty of questions and requests for help. About 90% of his clients are federal employees and retirees.

“In general, those 50 and up have gone through this before, are not too worried about getting back pay and have three to six months of savings,” said Feeley, who is part of the Goldstein Group of Raymond James.

But for younger folks in a different situation, “They are trying to figure things out, how to make things work,” he explained. “They may have been in these jobs for only a few years … and are wondering, ‘What happens when I miss my first paycheck?’”

The advisor says he’s been calling federal workers who are renters, for instance. “They tend to be younger … and Washington, D.C., is a high-rent area. They don’t have six months of savings and are freaking out a bit more [than older clients].”

Though these newbie federal employees are not necessarily looking for part-time work, “I have mentioned that they maybe should look at driving for Uber if this drags on,” the advisor said in an interview. “We don’t want them to touch” retirement savings plans, such as the Thrift Savings Plans in which federal workers save.

The workers have health care coverage during the shutdown.

“But there’s a concern that when they go back to work, some federal employees will have to pay back the monthly health insurance premiums they have not been paying for [during the furlough], which will make the first paycheck smaller than they are expecting,” Feeley explained.

Federal workers are not guaranteed back pay, “though they’ve always gotten it,” he said. Younger federal employees, however, are not entirely convinced they will.

As for older workers, “Some say, ‘I am bored and am going to work five more years,’ or ‘I love the time off and want to retire earlier than planned.’”

As for Feeley, there seems to be no downtime in sight. “I know there will be more questions to come if this lingers on to the end of next week,” he said.

Beyond Government

Commonwealth Financial advisor Katherine Liola says she is “in the thick of shutdown conversations.”

The president of Concentric Private Wealth of McLean, Virginia, says the practice serves many federal employees in the area.

“But the pain is being felt across the country by businesses and contractors that support the government, like those near the national parks,” explained Liola, a certified financial planner.

“And those companies may not have retroactive pay,” she said, causing small-business owners and employees to suffer.

Like Feeley, many of Liola’s clients had built-up savings and financial resources. “There’s still a mental mind game” that they must cope with, she adds. “When you are told to stay home and that your job is not essential, you are not going to work and not making an impact.”

She suggests federal employees review the mission and value of their jobs. “Write it down to see and reflect on it, to push out some of the noise from the headlines,” the advisor explained. “What is their work and the value-add they bring to it? What will be their focus … when they return?”

Even furloughed employees with savings have miscellaneous expenses that can be tough to pay, such as sizable credit-card bills that include holiday gifts.

“Some clients highly value stability, and if they have to tap into savings, it can cause lots of stress for those cash reserves,” Liola said. “We are having them review the expenses and identify monthly transactions, like gym costs and magazine subscriptions, to see what has to be paid or not.”

Automatic deductions for savings plans should stopped, the advisor points out. “You can always start them back up, though we know it’s a headache.”

“We want clients to have as much control and liquidity as possible,” Liola said, a sentiment Keeley shared.

Tough Times

In some situations, such as families with two breadwinners affected by the shutdown, it may make sense for at least one to do babysitting, lawn care or other services as a way to support their cash flow and take steps to better “control the situation,” Liola adds.

The federal government has prepared a letter for employees to take to financial and other institutions regarding their precarious pay situation, she says.

“This is about doing more hand-holding,” Liola explained, “and talking about next steps to take with cash flows and so forth. We’ve seen this before in our practice and do not want to instill fear. We want people to take steps they need to take and to act with rational decisions.”

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