The U.S. Agency for International Development (USAID) shutdown has put federal employees in a tough spot, with furloughs and missed paychecks creating a lot of uncertainty. Beyond the immediate financial strain, it raises bigger questions about job security, retirement savings, and long-term stability. While it’s being framed as a budget move, the reality is that it disrupts the lives of dedicated public servants. Now is the time to look at your options, take control of your finances, and plan for what’s next.
Short-Term Financial Impacts: Managing the Immediate Fallout
For USAID employees and contractors, an overnight loss of income means scrambling to figure out next steps. The stress can be overwhelming, and there is no clear timeline for when things might improve. The best approach is to focus on what you can control, starting with your finances.
- Covering the basics: Housing, utilities, and healthcare should be the top priority. If money is tight, tapping into TSP loans, using a personal credit line, or finding temporary work might help fill the gap.
- Sorting through federal benefits: Some benefits remain in place, but not all. Health insurance typically continues, but a prolonged furlough may impact retirement contributions and other protections.
- Considering early retirement options: Depending on eligibility, some employees may qualify for the Voluntary Early Retirement Authority (VERA) or Discontinued Service Retirement (DSR). Additionally, Voluntary Separation Incentive Payments (VSIP) may be offered to encourage early retirement, though these payments vary by agency.
Long-Term Consequences: Retirement and Pensions
A prolonged shutdown or career interruption can significantly affect retirement savings and pension calculations under the Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS). The most critical takeaway? Avoid withdrawing funds from FERS unless necessary — leaving federal service doesn’t mean losing pension eligibility if you return later.
- Breaks in service and pension calculations: Gaps in federal service can impact pension accrual, but prior service credits and reemployment rules may help mitigate these issues. Learn more about breaks in service here.
- Thrift Savings Plan (TSP) considerations: Employees should review their TSP contributions, as missing out on employer-matching funds can slow retirement savings growth. Market fluctuations can impact TSP balances, making it even more important to have a mix of investments to manage risk.
- Keeping retirement plans on track: Even if contributions need to be adjusted, continuing to invest — even at a lower amount — can help protect long-term financial security.
Learn more about your retirement benefits at our No-Cost webinars, featuring Ed Zurndorfer -
Career Considerations: Navigating Uncertainty and Future-Proofing
With USAID facing deep cuts, employees must decide whether to stay in federal service or explore other opportunities. A solid plan can help.
- Job security and promotions: With budgets tightening, career growth within federal agencies could slow. Staying connected, keeping an eye on internal job postings, and networking can help open new doors.
- Exploring private-sector options: International development, project management, and policy skills are in demand beyond government, and some employees may decide to transition into private-sector roles.
- Building new skills: Learning new skills can open doors, whether staying in federal service or considering a new path. Earning certifications, taking professional development courses, and building your network can help you stay competitive and ready for whatever comes next.
Federal Employee Financial Planning Strategies: Staying Resilient
A shutdown brings a lot of uncertainty, but having a plan can help you stay in control. Taking steps now to manage your finances can make a difficult situation a little easier.
- Plan for income gaps: If you can, set aside enough savings to cover a few months of essentials. A financial cushion can help keep things on track if your paycheck is delayed or stops.
- Find other ways to earn: Freelancing, consulting, or renting out property can bring in extra income and provide some financial security while things are uncertain.
- Get professional guidance: A CERTIFIED FINANCIAL PLANNER™ who understands federal benefits can help with important decisions about pensions, TSP strategies, and long-term financial health.
Preparing for What’s Next
The USAID shutdown has left many federal employees facing tough decisions, but there are ways to stay financially stable. Planning ahead can help manage expenses, protect savings, and navigate career shifts. Employees can confidently work through this uncertainty by staying informed, using available resources, and seeking guidance.
For personalized guidance, reach out to the Serving Those Who Serve team at [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
