A Financial Checklist for Federal Workers

Years ago, the other wealth advisors at XML Financial Group and I took a profile test that identified our professional personality based on two quick questions. It’s a fun memory; we all laugh when we look back on it because it was shockingly accurate. When my results came back, my profile was right at the top in bold: Controller. *Guilty* I love to feel in control. And you know what I bet feels really out of control right now? Being a federal worker. So, if you’re finding yourself at elevated stress levels due to the circumstances of the current federal workplace, here is a checklist of things you can do that are in your control.

1. Review your emergency savings and spending

Being unexpectedly out of work is precisely the kind of circumstance to utilize your emergency savings. The general rule of thumb is to have six months’ worth of your monthly spending on hand in the form of easily accessible cash savings. This is a good time to a) double-check that you have that much and b) consider whether the six-month equivalent is appropriate for you. If you were to find yourself out of a job, how long would it be before you could secure your next position? Is it longer than six months? Consider bumping up the savings level if so. If you use that savings to bridge the time between employment, that should be the first thing you focus on rebuilding after the new job starts. This is also a great time to reflect on your monthly spending, even if only at a high level. What areas would you cut back or eliminate if you were to find yourself in between employment? Try to name 3-5 categories or items. 

2. Be on top of your health (insurance)

Speaking of spending categories, if your health insurance coverage is under your current employer, you’ll want to know your options, especially since insurance can be costly. Often, your insurance extends through the end of the termination month. After that, COBRA is an option whereby you will pay not just the equivalent costs to the employee (which you’re already used to paying) but also the employer’s portion.Your state’s health exchange is another option; typically, these plans will be more expensive than in-service employment coverage. This is another reason to make sure your savings level is ready to bridge the gap (see #1!). If you want to review your options, email me at lobrien@xmlfg.com.

3. Be on top of your health (physical and mental)

High-stress times can wreak havoc on our health. So, this is a great time to identify cost-effective ways to maintain exercise and movement and to prioritize your mental health. Adrien Cotton recently gave me some great strength workouts you can do at home with the pull-up band – and a recent Amazon search priced these at $7. A ten-minute walk to start your day and a short walk after dinner can connect you with nature and keep that body moving – for free! To boost your mental health, a quiet bath with Epsom salts, spa music, and a candle can create a spa oasis in your own home and offer relaxation. Spending time with close friends or family can provide emotional support, and a listening ear is a great way to keep the stress at bay. 

4. Know where your money is – and how to access it

You’ve likely been saving for retirement with the Thrift Savings Plan (“TSP”), the federal government’s retirement plan. Ensure you can log in to the TSP website and download a recent statement to your personal device. Review it for accuracy and familiarity. If you find your service terminated with the government, you will have the option to rollover the TSP into another retirement account type – whether that’s a good idea for you depends on your personal circumstances, but I suggest, at minimum, knowing where to go within the website to initiate a rollover if you need or want to.

Another essential part of your retirement savings is pension eligibility. This is a great time to ensure you also know how to log in to this website. Take a screenshot of your pension metrics—your length of service and/or start date, current pension account accumulated value, and projected income values. Save the screenshot to your personal device.

5. Protect your information

If you haven’t done so already, it’s good practice to lock your credit at the three credit bureaus – TransUnion, Equifax, and Experian. This prevents bad actors from accessing and utilizing your credit fraudulently. If you have an upcoming situation whereby you expect to use your credit – buying a home, buying a new car – you can temporarily lift the lock.

Another important way to protect yourself is to embrace using a password manager. This kind of tool can help you not only maintain records for your various profiles, but it’s at its greatest advantage to you if you take the step of resetting your passwords—especially for your financial websites—to strong passwords that are far more challenging to hack. Use a password manager that is accessible on all your devices.

6. Consider Roth conversion opportunities

If you do find yourself without work, that could mean that your taxable income for the year is substantially less than other “normal” years. If your corresponding tax rate is lower than usual, that could create an opportunity to do a partial Roth conversion of pre-tax retirement funds. This could be a way to really take advantage of the circumstances. Work with your trusted financial and tax advisors to evaluate if this is an opportunity for you.

7. Work with a financial professional

This is a great time to talk with your trusted wealth advisor about your particular situation. Walk through your spending and savings and design a game plan that helps you feel a bit more at ease. I’m here to help. Email me with questions or to set up a call at lobrien@xmlfg.com.

This communication is for informational and educational purposes only. No content or reference is intended to be a recommendation for the sale or investment in any product, strategy or service nor should it be perceived as individual advice. Please seek the advice of a financial advisor regarding your particular financial situation. Visit xmlfg.com for more information. 

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