What Would a Government Shutdown Mean For You?

The last day of September was the last chance before government funding expired. Thankfully, a last-minute agreement passed by the House and Senate kept the government funded through to November 17th, narrowly avoiding a government shutdown. But, what happens when November 17th comes? Will we have to go through this again? And how would it affect you, as a pre-retiree or retiree? What even is a government shutdown, and what should you do to prepare for one?

Firstly, it’s important that you understand what a government shutdown is. A shutdown happens when the government fails to pass or enact a budget or spending bill to fund government operations. This results in many government services and functions being temporarily halted or disrupted. Additionally, a shutdown affects government employees and contractors and can harm the economy.

Shutdowns can be caused by a budgetary impasse or a failure to reach an agreement on government funding between the government’s legislative and executive branches. They’ve occurred periodically here in the United States when there have been failures to pass federal budgets or funding bills, as there nearly was in September.

Government Shutdowns in the Past

Ever since Congress introduced the modern budget process in 1976, there have been a total of 20 “funding gaps,” during which funds were not appropriated for at least a day. However, prior to 1980, the government did not experience any full-fledged shutdowns, instead continuing normal operations through funding gaps. Since 1981, ten funding gaps of three days or fewer have occurred. During these gaps, government operations were only minimally affected. There have now been just 4 “true” shutdowns, in which operations were affected for more than one business day. The first two shutdowns, each lasting 26 days, happened during 1995 and 1996. The third was in 2013, and was only for 16 days. The fourth shutdown, taking place in 2018 and 2019, was the longest: This one lasted 35 days.

Frequently Asked Questions

How likely is a government shutdown to affect you, as a retiree or pre-retiree? This varies, obviously, depending on your individual situation. But, here are some answers to frequently asked questions, in order to hopefully help you gain a better understanding of what you can expect during a shutdown.

Things That Likely Wouldn’t Be Affected

Would Medicare/Medicaid benefits be affected?
Current Medicare, Medicaid, and/or disability insurance beneficiaries will continue to receive their benefits, assuming the shutdown only lasts for three months or less.

Would a government shutdown affect when I receive my Social Security?
No, it would not. A shutdown does not impact Social Security’s funding. However, in the event of a shutdown, some Social Security Administration employees will have to be furloughed, meaning their customer service could be impacted negatively.

Would military and federal retiree benefits be suspended?
Military and federal retirees will continue receiving their retirement benefits during a government shutdown. Processing new applications or other requested changes will be delayed during this time, however.

Would you still receive your mail?
Yes, you will. The U.S. postal service will be completely unaffected in the event of a government shutdown.

How would a shutdown impact state and local services?
A federal government shutdown will not immediately affect any state or local services. However, some local or state governments may change their operations with federal funding cut off. It’s important that you check with your own state and local agencies for specific questions.

Things That May Be Negatively Affected

Would air travel be affected?
Air traffic controllers, TSA, and Customs and Border Protection agents will remain on the job without pay during a shutdown. However, if some do not report to work (Which has been known to happen during shutdowns) there will be significant delays across the country.

How would this affect environmental protection and cleanup?
The EPA will stop inspecting the majority of hazardous waste sites, as well as drinking water and chemical facilities. Efforts to address dangerous contaminants linked to negative health effects will also be delayed.

What would this mean for disaster relief efforts?
FEMA staff will still be there to respond to emergencies. However, long-term projects will be delayed due to a lack of funding for the Disaster Relief Fund.

What would be the impact on food assistance?
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) will quickly run out of funding, and be unable to provide food for children and parents in need.

What would the impact on food safety activities be?
FDA food safety activities, such as routine inspections of facilities, will be delayed across the country.

What will be the effect on housing?
The Federal Housing Administration (FHA) will stop insuring some new mortgages, and the Department of Housing and Urban Development (HUD) will stop processing some new loans. Furthermore, funding for federal housing assistance programs may be jeopardized in a prolonged shutdown.

What would this mean for medical research?
The National Institutes of Health will be forced to delay new clinical trials. Additionally, new patients who are waiting for a chance at new treatment through a clinical trial will be turned away.

What Can You Do?

What can you do to retain some financial stability in case a shutdown does happen? Well, a fixed indexed annuity (or FIA) can offer you a source of income that could last you your entire life, and won’t be affected in the event of a government shutdown. And, right now, one of our annuity products is offering a 40% bonus. That means that for every $100K contributed to your annuity, an additional $40K will be added to your income and death benefits. This is the best offer we have ever seen for one of these products. Contact American Principle to learn more.

Source: Debbie Dingell

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