Personal Finance

Federal workers’ money questions answered

Published

2 months ago

February 21, 2025

Protesters demonstrate in support of federal workers outside of the U.S. Department of Health and Human Services on Feb. 14, 2025 in Washington, DC.

Anna Moneymaker | Getty Images

On Feb. 11, Elizabeth Aniskevich, an attorney at the Consumer Financial Protection Bureau, received a notice that she was being terminated immediately.

“I was completely shocked,” said Aniskevich, 39. She had been with the CFPB for nine months and imagined spending her entire career in the federal government.

“I didn’t expect it to unfold this way,” she said.

More than a week later, she’s still scrambling for basic answers. “There’s no information about what’s going on with my benefits, or what I need to do with unemployment,” Aniskevich said.

She’s worried about how she’ll pay the mortgage on her Washington, D.C., apartment after her emergency savings runs out in a few months.

“I’ve worked really hard to be financially stable,” Aniskevich said.

Elizabeth Aniskevich.

Courtesy: Elizabeth Aniskevich

Aniskevich is one of thousands of federal workers laid off by the new Trump administration in recent weeks and thrown into financial and career uncertainty. President Donald Trump and Elon Musk‘s secretive government-slashing effort, the Department of Government Efficiency or DOGE, are working to shrink the federal workforce.

Losing one’s job is always difficult. But the suddenness and speed of the firings, which have affected offices from the Environmental Protection Agency to the U.S. Department of Education, have left workers especially in the dark about their rights and next steps, experts said.

“Most people would have selected the public sector because it has a reputation of being a more stable work environment than the private sector,” said Don Moynihan, a public policy professor at the University of Michigan. “But in this case, that stability proved to be an illusion.”

CNBC spoke with financial advisors and policy experts to get answers to some of the many important questions terminated federal workers likely have right now.

Workers may be able to appeal, take legal action

The Trump administration and Musk’s DOGE have largely targeted workers on a probationary status for cuts.

That’s because probationary workers, who have typically been in their position for a year or less, have fewer protections after they’re removed than do career civil servants, said David Eric Lewis, a political science professor at Vanderbilt University.

For example, probationary workers might not meet the requirements to appeal their termination to the U.S. Merit Systems Protection Board. The board reviews cases in which federal workers were laid off or suspended.

Still, there are limited cases when they can appeal, experts said. You should speak to an employment lawyer or your union representative for more details, experts recommend.

The name and logo for the Consumer Financial Protection Bureau (CFPB) is seen scraped off the door of its building in Washington, D.C., U.S., Feb. 20, 2025.

Brian Snyder | Reuters

“They can also seek legal relief,” Lewis said. Your union may help you file your lawsuit in federal court, he added.

It can be more effective to bring your legal challenge as a group, with other terminated federal workers, Lewis said.

“That’s what is happening,” he said. “There’s a hope that there is at least a stop to these orders.”

A federal judge Thursday denied a bid by labor unions to block the mass layoffs across the federal workforce. The National Treasury Employees Union alongside four other groups filed a lawsuit against the firings on Feb. 12.

What to know about unemployment benefits

Federal workers can collect unemployment benefits through the Unemployment Compensation for Federal Employees (UCFE) program. Some government employees — including ex-military personnel discharged under honorable conditions and former members of the National Oceanographic and Atmospheric Administration — receive benefits through a separate program, known as the Unemployment Compensation for Ex-servicemembers (UCX).

The jobless benefits, which are supposed to arrive within two or three weeks after you apply for them, are nearly identical to those of private-sector workers, said Michele Evermore, senior fellow at the National Academy of Social Insurance.

States — as well as U.S. territories and the District of Columbia — administer the payments. Workers must submit an application with the appropriate workforce agency. You should apply in the state or district where your last official duty station was located, Evermore said.

Those working remotely on a full-time basis likely need to file a claim in their state of residence, Evermore said.

Workers should apply for unemployment as soon as possible, experts said. Delays are likely amid the purge of government workers.

Those claiming UCFE benefits will likely need to include certain documents with their claim, including a SF-8, or a Notice to Federal Employee About Unemployment Insurance, as well as a SF-50, or a Notification of Personnel Action, according to the U.S. Labor Department.

Those applying for UCX benefits should have a copy of their service and discharge documents — DD-214 or a similar form, the Labor Department said.

Federal employers are supposed to provide these forms to workers upon separation, but Aniskevich said the Consumer Financial Protection Bureau still hadn’t given her those documents as of Friday.

For now, she filed her unemployment application in Washington, D.C., without them.

“It’s stressful to have uncertainty about whether my claim can be processed given the lack of forms,” Aniskevich said.

Federal agencies appear to be citing lackluster performance as rationale for many job cuts in termination letters, experts said. Even so, workers should still apply for benefits, Evermore said. The cause must generally rise to the level of “gross misconduct” to prevent people from receiving aid.

This could delay benefits if the government contests a claim, however, experts said.

Health coverage for terminated workers

Meanwhile Chris, who worked as a transportation program specialist at the Federal Transit Administration, was laid off on February 14. Like Aniskevich, he was a probationary worker, and had been employed by the FTA for around nine months. (He requested to use his first name only, out of fear of retaliation from the Trump administration.)

Despite the financial stability usually associated with a federal job, he found himself with no protections.

“There was no severance pay,” said Chris, 33, who is based in the Los Angeles area.

Chris did learn that his health benefits will continue for 31 calendar days after Valentine’s Day.

Similarly, federal employees should try to determine the specific date their health coverage will end, experts said. While the timelines may vary, most probationary workers will need to find new health insurance soon.

Those who wish to continue with their current health care should look into the federal government’s Temporary Continuation of Coverage, experts say. Under this option, you’re able to extend your federal workplace plan for up to 18 months after termination. (It’s similar to COBRA, or the Consolidated Omnibus Budget Reconciliation Act, for private-sector workers.)

Keep in mind that, with TCC, you’ll be responsible for the full cost of your premiums, plus any administrative fees.

“It’s going to be [a] pretty big hike,” said Brennan Rhule, a Reston, Virginia-based certified financial planner who specializes in federal workers.

If the new premium cost is too high to shoulder under TCC, you may qualify for a special enrollment period of the Affordable Care Act marketplace, according to Kate Ende, leader of the policy team at the Consumers for Affordable Health Care, a nonprofit. The special enrollment period typically gives you 60 days to sign up for a marketplace plan after you lost your coverage.

Medicaid might also be an option, Ende said, and if you qualify you can enroll at any time for it.

Relief options for recurring bills

Federal workers concerned about staying current with their bills should reach out to their lenders and explain their situation, consumer advocates said.

For instance, contact your mortgage lender and ask about forbearance or deferment options, said John Breyault, vice president of public policy at the National Consumers League. If you’re a renter, landlords and property managers may offer temporary payment plans or deferments.

Some auto lenders allow deferments, too, especially if you have a good payment track record. Meanwhile, your auto insurer may be able to adjust your coverage and lower your costs if you will no longer be driving long distances to work, Breyault said.

For utilities like electricity, water, gas, internet and phone service, see if your providers offer a grace period or deferred payments, Breyault said.

Those with student loan bills can request an unemployment deferment with their servicer.

Keep in mind that such concessions and breaks can be helpful in the near-term, but read the terms thoroughly. There could be long-term costs associated, such as interest continuing to accrue or other fees.

Watch out for ‘undoable’ retirement account missteps

Federal workers who find themselves unexpectedly out of work may be tempted to take money from their retirement plans. However, experts emphasize it is important to know the ins and outs of each plan’s rules to avoid unexpected costs.

“Before you do anything, make sure you talk to somebody who understands and can guide you,” said CFP Mark Keen, who is a federal benefits expert with the National Active and Retired Federal Employees Association.

“Make sure that you don’t make any mistakes that are undoable,” said Keen, who is also a partner at Keen & Pocock.

Federal workers generally have access to a pension through the Federal Employee Retirement System, or FERS, and to a defined contribution savings plan, known as the Thrift Savings Plan, or TSP.

FERS provides a guaranteed income stream once a worker reaches a certain age, a perk that’s mostly unavailable in the private sector, Keen said.

Mass government layoffs: Impact on the labor force and the economy

Federal workers may withdraw their FERS contributions if they leave federal employment, but that may not be the best choice. It will take a while to build your pension back up if you return to federal service, said Katelyn Murray, a chartered federal employee benefits consultant and director of relationship management at Serving Those Who Serve.

If you leave the balance intact, you retain the years of service you’ve accumulated, Murray said. Having a FERS pension also allows retirees to continue health coverage through the Federal Employees Health Benefits, or FEHB, in retirement.

Even if you’re not sure you may return to federal work, you may want to think twice before cashing out, Murray said.

“It’s more about flexibility and keeping your options open,” Murray said.

Federal workers may have some flexibility with a Thrift Savings Plan that is like a 401(k) plan and allows employees to make contributions that are matched by government agencies.

Generally, participants who are at least age 59½ can make withdrawals without penalties.

In some cases, workers may qualify for the Rule of 55, which may allow them to take withdrawals from the TSP without having to pay a 10% early withdrawal penalty, provided they are at least age 55 when they leave their job (or age 50 for some public safety employees).

If you haven’t found another job yet, you can’t take a TSP loan, but you may be able to look at doing a hardship withdrawal, Murray said. Importantly, by doing so you may incur taxes and/or penalties, as well as delay your anticipated retirement date.

Personal Finance

What student loan forgiveness opportunities still remain under Trump

Published

1 hour ago

April 26, 2025

Business Finance News

Halfpoint Images | Moment | Getty Images

Under the Biden administration, the U.S. Department of Education made regular announcements that it was forgiving student debt for thousands of people under various relief programs and repayment plans.

That’s changed under President Donald Trump.

In his first few months in office, Trump — who has long been critical of education debt cancellation — signed an executive order aimed at limiting eligibility for the popular Public Service Loan Forgiveness program, and his Education Department revised some student loan repayment plans to no longer conclude in debt erasure.

“You have the administration trying to limit PSLF credits, and clear attacks on the income-based repayment with forgiveness options,” said Malissa Giles, a consumer bankruptcy attorney in Virginia.

The White House did not respond to CNBC’s request for comment.

Here’s what to know about the current status of federal student loan forgiveness opportunities.

Forgiveness chances narrow on repayment plans

The Biden administration’s new student loan repayment plan, Saving on a Valuable Education, or SAVE, isn’t expected to survive under Trump, experts say. A U.S. appeals court already blocked the plan in February after a GOP-led challenge to the program.

SAVE came with two key provisions that lawsuits targeted: It had lower monthly payments than any other federal student loan repayment plan, and it led to quicker debt erasure for those with small balances.

“I personally think you will see SAVE dismantled through the courts or the administration,” Giles said.

But the Education Department under Trump is now arguing that the ruling by the 8th U.S. Circuit Court of Appeals required it to end the loan forgiveness under repayment plans beyond SAVE. As a result, the Pay As You Earn and Income-Contingent Repayment options no longer wipe debt away after a certain number of years.

There’s some good news: At least one repayment plan still leads to debt erasure, said higher education expert Mark Kantrowitz. That plan is called Income-Based Repayment.

If a borrower enrolled in ICR or PAYE eventually switches to IBR, their previous payments made under the other plans will count toward loan forgiveness under IBR, as long as they meet the IBR’s other requirements, Kantrowitz said. (Some borrowers may opt to take that strategy if they have a lower monthly bill under ICR or PAYE than they would on IBR.)

Public Service Loan Forgiveness remains

Despite Trump‘s executive order in March aimed at limiting eligibility for Public Service Loan Forgiveness, the program remains intact. Any changes to the program would likely take months or longer to materialize, and may even need congressional approval, experts say.

PSLF, which President George W. Bush signed into law in 2007, allows many not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

What’s more, any changes to PSLF can’t be retroactive, consumer advocates say. That means that if you are currently working for or previously worked for an organization that the Trump administration later excludes from the program, you’ll still get credit for that time — at least up until when the changes go into effect.

For now, the language in the president’s executive order was fairly vague. As a result, it remains unclear exactly which organizations will no longer be considered a qualifying employer under PSLF, experts said.

However, in his first few months in office, Trump has targeted immigrants, transgender and nonbinary people and those who work to increase diversity across the private and public sector. Many nonprofits work in these spaces, providing legal support or doing advocacy and education work.

For now, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov or request one from their loan servicer. They should keep a record of the number of qualifying payments they’ve made so far, said Jessica Thompson, senior vice president of The Institute for College Access & Success.

“We urge borrowers to save all documentation of their payments, payment counts, and employer certifications to ensure they have any information that might be useful in the future,” Thompson said.

Other loan cancellation opportunities to consider

Federal student loan borrowers also remain entitled to a number of other student loan forgiveness opportunities.

The Teacher Loan Forgiveness program offers up to $17,500 in loan cancellation to those who’ve worked full time for “complete and consecutive academic years in a low-income school or educational service agency,” among other requirements, according to the Education Department.

(One thing to note: This program can’t be combined with PSLF, and so borrowers should decide which avenue makes the most sense for them.)

In less common circumstances, you may be eligible for a full discharge of your federal student loans under Borrower Defense if your school closed while you were enrolled or if you were misled by your school or didn’t receive a quality education.

Borrowers may qualify for a Total and Permanent Disability discharge if they suffer from a mental or physical disability that is severe and permanent and prevents them from working. Proof of the disability can come from a doctor, the Social Security Administration or the Department of Veterans Affairs.

With the federal government rolling back student loan forgiveness measures, experts also recommend that borrowers explore the many state-level relief programs available. The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

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Personal Finance

Many Americans are worried about running out of money in retirement

Published

20 hours ago

April 25, 2025

Business Finance News

M Swiet Productions | Getty Images

Many Americans are worried they’ll run out of money in retirement.

In fact, a new survey from Allianz Life finds that 64% Americans worry more about running out of money than they do about dying. Among the reasons cited for those fears include high inflation, Social Security benefits not providing enough support and high taxes.

The fear of running out of money was most prominent for Gen Xers who are approaching retirement. However, a majority of millennials and baby boomers also said they worry about their money lasting, according to the online survey of 1,000 individuals conducted between January and February.

Separately, a new Employee Benefit Research Institute report finds most retirees say they are living the lifestyle they envisioned and are able to spend money within reason. Yet more than half of those surveyed agreed at least somewhat that they spend less because of worries they will run out of money, according to the survey of more than 2,700 individuals conducted between January and February.

Meanwhile, a Northwestern Mutual survey reported that 51% of Americans think it’s “somewhat or very likely” they will outlive their savings. The survey polled 4,626 U.S. adults aged 18 and older in January.

Since those studies were conducted, new tariff policies have caused disturbance in the stock markets and prompted speculation that inflation may increase. Meanwhile, new leadership at the Social Security Administration has prompted fears about the continuity of benefits. Those headlines may negatively affect retirement confidence, experts say.

With employers now providing a 401(k) plan and other savings plans versus pensions, it is largely up to workers to manage how much they save heading into retirement and how much they spend once they reach that life stage. That responsibility can also lead to worries of running out of money in the future, experts say.

How to manage the ‘fear of outliving your resources’

Because of the unique risks every individual or couple faces when planning for retirement, the best approach is typically to transfer some of that burden to a third party, said David Blanchett, head of retirement research at PGIM DC Solutions.

Creating a guaranteed lifetime income stream that covers essential expenses can help reduce the financial impact of any events that require retirees to cut back on spending, Blanchett explained.

That should first start with delaying Social Security benefits, he said. While eligible retirees can claim benefits as early as 62, holding off up until age 70 can provide the biggest monthly benefits. Social Security is also unique in that it provides annual adjustments for inflation.

73% of Americans are financially stressed

Next, retirees may want to consider buying a lifetime income annuity that can help amplify the monthly income they can expect. Admittedly, those products can be complicated to understand. Therefore Blanchett recommends starting out by comparing very basic products like single premium immediate annuities that are easier to compare.

“Unless you do those things, you just can’t get rid of that fear of outliving your resources,” Blanchett said.

Without a guaranteed income stream, retirees bear all of the financial risk themselves, he said.

“Retirement could last 10 years; it could last 40 years,” Blanchett said. “You just don’t know how long it’s going to be.”

Among retirees, there has been some hesitation to buy annuities, said Craig Copeland, EBRI’s director of wealth benefits research. Such a purchase requires parting with a lump sum of money in exchange for the promise of a guaranteed income stream.

“We see great increase in interest, but we aren’t seeing upticks in take up yet,” Copeland said. “I do think that’s going to start to change.”

What can help boost retirement confidence

To effectively plan for retirement, it helps to seek professional financial assistance, experts say.

Meanwhile, few people have a plan of their own for how they may live on the assets they’ve worked hard to accumulate, according to Kelly LaVigne, vice president of consumer insights at Allianz Life.

“This is something that you should not plan on doing on your own,” LaVigne said.

While the survey from Northwestern Mutual separately found individuals think they need $1.26 million to retire comfortably, the real number individuals need is based on their personal situation, said Kyle Menke, founder and wealth management advisor at Menke Financial, a Northwestern Mutual company.

In thinking about how life will look in 30 years, there are a variety of things to consider, Menke said. This includes stock market returns, taxes, inflation and medical expenses, he said.

Even people who have enough money for retirement often don’t feel confident in their ability to manage all of those factors on their own, he said. Financial advisors have the ability to run different simulations and stress test a plan, which can help give retirees and aspiring retirees the confidence they’re lacking.

“I think that’s where the biggest gap is,” said Menke, referring to the confidence Americans are lacking without a plan.

Personal Finance

Trump tariffs will hurt lower income Americans more than the rich: study

Published

22 hours ago

April 25, 2025

Business Finance News

Shipping containers at the Port of Seattle on April 16, 2025.

David Ryder/Bloomberg via Getty Images

Tariffs levied by President Donald Trump during his second term would hurt the poorest U.S. households more than the richest over the short term, according to a new analysis.

Tariffs are a tax that importers pay on foreign goods. Economists expect consumers to shoulder at least some of that tax burden in the form of higher prices, depending on how businesses pass along the costs.

In 2026, taxes for the poorest 20% of households would rise about four times more than those in the top 1%, if the current tariff policies were to stay in place. Those were findings according to an analysis published Wednesday by the Institute on Taxation and Economic Policy.

Car prices are going up from Trump's auto tariffs 'unless something changes': Liberty Subaru owner

For the bottom 20% of households — who will have incomes of less than $29,000 in 2026 — the tariffs will impose a tax increase equal to 6.2% of their income that year, on average, according to ITEP’s analysis.

Meanwhile, those in the top 1%, with an income of more than $915,000 a year, would see their taxes rise 1.7% relative to their income, on average, ITEP found.

Economists analyze the financial impact of policy relative to household income because it illustrates how their disposable income — and quality of life — are impacted.

Taxes by ‘another name’

“Tariffs are just taxes on Americans by another name,” researchers at the Heritage Foundation, a conservative think tank, wrote in 2017, during Trump’s first term.

“[They] raise the price of food and clothing, which make up a larger share of a low-income household’s budget,” they wrote, adding: “In fact, cutting tariffs could be the biggest tax cut low-income families will ever see.”

Meanwhile, there’s already evidence that some retailers are raising costs.

A recent analysis by the Yale Budget Lab also found that Trump tariffs are a “regressive” policy, meaning they hurt those at the bottom more than the top.

The short-term tax burden of tariffs is about 2.5 times greater for those at the bottom, the Yale analysis found. It examined tariffs and retaliatory trade measures through April 15.

“Lower income consumers are going to get pinched more by tariffs,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.

Treasury Secretary Scott Bessent has said tariffs may lead to a “one-time price adjustment” for consumers. But he also coupled trade policy as part of a broader White House economic agenda that includes a forthcoming legislative package of tax cuts.

“We’re also working on the tax bill and for working Americans, I believe that the reduction in taxes is going to be substantially more,” Bessent said April 2.

It’s also unclear how current tariff policy might change. The White House has signaled trade deals with certain nations and exemptions for certain products may be in the offing.

Trump has imposed a 10% tariff on imports from most U.S. trading partners. Mexico and Canada face 25% levies on a tranche of goods, and many Chinese goods face import duties of 145%. Specific products also face tariffs, like a 25% duty on aluminum, steel and automobiles.