⏳ Shutdown Watch: What It Means for Your Pay, TSP, and Retirement

With the October 1 deadline approaching, no agreement has been reached — and the prospect of a government shutdown is back on the table.

If you’ve lived through one before, the process will feel familiar.

But it still raises big questions for your paycheck, your TSP, and even your retirement plans.

What Actually Happens in a Shutdown

Roughly a week before funding runs out, the Office of Management and Budget instructs agencies to dust off their contingency plans.

At that point, employees are divided into two groups:

• Excepted staff — those in safety, security, or mission-critical roles. You’ll keep working, but your pay is delayed until funding is restored.

• Non-excepted staff — placed on furlough without pay. You’ll receive back pay once the shutdown ends, but timing can be unpredictable.

It’s a stressful pause, even though most shutdowns eventually end with retroactive pay.

How This Affects Your TSP and Retirement

For active employees, the biggest short-term impact is that payroll contributions to your TSP stop during the shutdown. 

That means no new money goes in, and your agency match pauses as well.

While this won’t derail long-term growth, it’s worth being aware if you’re counting on consistent contributions.

If you’re close to retirement, shutdowns can also slow down the Office of Personnel Management. Retirement applications often pile up, creating backlogs that delay processing.

Submitting your paperwork early gives you the best chance of avoiding those bottlenecks.

For retirees already drawing income, the picture is steadier.

Federal annuities and Social Security benefits continue to be paid, since they’re funded outside the annual appropriations process. The only caveat: customer service or claims processing may move more slowly during a shutdown.

What You Can Do Now

The best defense is preparation:

• Build a small cash cushion if you can, enough to cover a paycheck or two.

• Confirm whether your role is “excepted” or “non-excepted” so there are no surprises.

• If you’re retiring soon, file your paperwork ahead of schedule to minimize processing delays.

And most importantly, don’t panic about your TSP. A brief interruption in contributions won’t undo decades of compounding. Your long-term retirement strategy remains intact.

Shutdowns are disruptive, but they follow a familiar script.

By preparing now, you’ll be ready to ride out the uncertainty — and keep your financial plans on track.

Best,
—FWR