How Sequestration Could Affect Retirement Investors

by Marc Bastow | February 28, 2013 12:33 pm

How Sequestration Could Affect Retirement Investors

With the automatic cuts from the sequestration[1] set to kick in Friday, it’s hopefully time for Congress to finally get down to brass tacks and cut a deal.

Luckily for retirees, although you’ll still feel something of a pinch, it’s not necessarily time to bite your nails.

For one, any cuts scheduled for Friday and beyond do not affect either Social Security or Medicaid payments; both were exempted from sequestration.

And as for Medicare, as you can see by this chart from Sarah Kliff’s Wonkblog in the Washington Post[2], cuts to that program — essentially the healthcare program for seniors, though it also provides for others with disabilities — are limited to 2% of the program’s budget … a far cry from others:

sequestercuts How Sequestration Could Affect Retirement Investors

Having said that, those in retirement (or those planning for it) won’t be entirely unaffected.

Unemployment benefits are scheduled to be cut, and a number of social programs — including nutrition assistance programs for seniors — outside of healthcare are likely to feel at least some part of the Medicare axe’s blade, too. Funding for research projects that rely on federal funding also could see cutbacks, and it’s possible that hospitals heavily reliant on federal money will have to scale back services and hours (though you’ll have to check your local hospital or healthcare to be sure).

As for other fallout: Cuts to the Social Security Administration could result in employee furloughs and SSA center shutdowns[3], delaying retirement and disability claims processing and setting up the possibility of long waits for in-house services.

Still, the takeaway on the biggest fronts is that your Medicaid payments are shielded and your Social Security check should arrive on time.

Unless the Postal Service shuts down. But that’s a discussion for another day.

Marc Bastow is an Assistant Editor at InvestorPlace.com.

Endnotes:
  1. automatic cuts from the sequestration: http://investorplace.com/investorpolitics/taking-stock-of-the-sequester/
  2. Sarah Kliff’s Wonkblog in the Washington Post: http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/14/the-sequester-cuts-in-one-graph/
  3. could result in employee furloughs and SSA center shutdowns: http://articles.baltimoresun.com/2013-02-25/news/bs-md-sequester-ssa-20130225_1_budget-cuts-sequestration-witold-skwierczynski

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