Federal workers are yanking money out of retirement accounts
Growing numbers of federal workers have been tapping their retirement funds in a sign of how the government shutdown is squeezing day-to-day finances.
Federal Retirement Thrift Investment Board data show a 34% jump in the number of hardship withdrawals in the two and 1/2 weeks after Christmas when compared to the same period last year. The data goes through Jan. 14, the first weekday after many federal employees missed paychecks.
The outflows mostly come from investments run by BlackRock, the sole manager for four of the Thrift Savings Plan’s five individual funds. A spokeswoman for the New York-based company declined to comment.
Thrift Savings Plan spokeswoman Kim Weaver said she couldn’t compare the withdrawal rate now to those during previous U.S. government closures, though she did say in an email that there was a “surge in hardship withdrawals in October 2013.”
During that shutdown, more than 14,000 plan participants took hardship withdrawals, and that year ended with a decade-high number of loans and such withdrawals.
“The longer the shutdown lasts, the more withdrawals we’d expect to see,” Weaver said.
TSP’s Weaver noted that during the market’s tumultuous fourth quarter, many participants shifted money out of the funds managed by BlackRock to the one that invests in short-term Treasury bills.
The federal plan had about 5.5 million participants as of Dec. 31.