Advice from a financial planner for concerned federal workers

From an offer of “deferred resignations” to promises of cuts to the federal workforce, many of the moves taken and proposed by the Trump administration have left some federal workers feeling uneasy.

Thiago Glieger, of RMG Advisors in Rockville, Maryland, specializes in financial planning for federal employees and said he is currently receiving a lot of questions about the “deferred resignation” offer, some of which come from workers who may be considering it because they are at or close to retirement age.

The top question he asked is about whether taking it would impact a worker’s retirement benefit.

“I just want to bust that myth that your benefits are not going to be stripped away from you,” Glieger said.

Now those considering the offer need to make sure they are truly eligible for retirement by the time the resignation kicks in on Sept. 30, otherwise he said that could result in pension reductions among other concerns.

“I think that’s a really important decision and detail to be aware of, if somebody is leaving too soon,” Glieger said.

The next thing to consider is are you truly in a position to retire?

“Do you have a formal retirement plan that’s going to account for all of the little moving pieces so that when you’re not earning an income anymore, you still get to maintain the lifestyle that you’ve grown used to,” Glieger said.

Glieger also urges people close to retiring to have emergency funds, that will cover expenses for three to six months for people in two-income households, and about a year for people in one-income households.

For those looking to take the deal but planning on continuing to work, he recommends having emergency cash that will cover you for six months in a single-income household and three to four months for dual-income households.

Glieger does recommend that federal workers also check with an employment attorney too, before signing the deal because there may be rights that come with the job that is signed away by accepting the deal.

“It’s best that they talk to counsel about their specific circumstance and what it could mean to them in the long term,” Glieger said.

What about those staying?

Glieger said many of his clients are “wary” of the offer and plan to stay but are concerned about a possible workforce reduction that could come.

“They’re very scared,” Glieger said.

He said the first step for federal workers worried about the future is to look at their financial plans and increase their cash position.

“That emergency fund is really your lifeline to be able to bridge something crazy, like losing a job until you can figure out where you’re going to land on your feet next,” Glieger said.

He said while it will be tough, he recommends those without emergency funds to “really cut down on expenses” with a goal of saving enough cash to get them through a few months without work.

Glieger also recommends that concerned federal workers “err on the side of caution” and be more conservative with their money. He said for the federal workers, that could mean putting some extra money into the Thrift Savings Plan — G Fund.

“The G Fund is a very safe and protected, it’s guaranteed to not lose principle and value, and so that is a good investment for somebody that is a little bit worried, because if you’re wrong, you still got a little bit of interest … you didn’t lose your funds,” Glieger said.

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