The future (if any) of your retirement plan

Are you confused about what Congress can, will, might or might not do to your retirement plan? If you are, it means you have been paying attention to the very confusing congressional budget process.

Worst case scenario, you could be hit with a permanent cut in take-home pay, anywhere from 4.4 percent to 6 percent. Or lose inflation protection on your FERS retirement income. No more cost-of-living adjustments for FERS retirees. Or you could have to work longer than you planned until you become eligible (age 62) to get Social Security. Or, if you are a firefighter, air traffic controller or federal agent, you might be forced to get a second job after your age-related mandatory retirement until at least age 62. Or lose your defined benefit FERS retirement program entirely. Your future retirement income would be based on Social Security and whatever you invested (and hopefully earned) in the Thrift Savings Plan.

Best case scenario, you will wake up just before Christmas to discover that once again, Congress and the White House have failed to make any changes (or only small ones) in your retirement plan.

The reason for the confusion is the way the House and Senate do business. Or more often, do not do business.

In this case, passing a budget would pave the way for tax “reform” (the word reform should always be in quotes), which is a top priority of the White House. So how does that happen?

Imagine two TV-style 1950s clueless husbands whose long-suffering wives send them for their annual trip to the supermarket.

One (like the House budget plan) has a very specific shopping list. He is to spend (or in this case, save) by eliminating certain things. If he sticks to the plan, it will allegedly save $32 billion (with a ‘b’) on the civil service side of the ledger over the next 10 years.

The other (like the Senate plan that was approved last week ) just says, “cut the grocery bill by XXX number of dollars” You figure it out.

To further the confusion, neither budget plan has specific instructions or effective dates. Any changes made could be retroactive (unlikely but possible), effective upon enactment or some time in the future.

The issue now is what happens when the House and Senate meet to iron out their differences. If the House prevails, federal workers, postal workers and retirees would be in for a world of hurt. The retirement plan they were promised, when hired, would change drastically. But if the Senate plan wins the day in conference — and the full House and Senate OK it — feds are home free. At least for another year.

Vets of the civil service have been through this exercise before. Many times. Virtually everything, every change that is in the House plan, has been proposed before. And didn’t happen.

This year, however, many worried that with Republicans in control of the House, Senate and White House, those who wanted to drain the swamp would have a relatively easy time. But so far, they haven’t made much progress.

If there is one thing Congress isn’t good at, it is getting things done. Particularly on time. There are so many conflicting agendas and egos involved, it is entirely possible that, when the smoke clears, little or nothing has changed. The next few weeks will be critical. So stay tuned. But the pros say you shouldn’t panic nor should you retire (if you otherwise want or need to stay on the job) simply because of what they may do to your retirement package. Or not.

Nearly Useless Factoid

By Michael O’Connell

“Defenestration” is the act of throwing something or someone out a window.

Source: Wikipedia

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