Money Matters Episode 329- Federal Job Cuts 2025 W/ Brian Kuhn

Money Matters Episode 329

[00:00:00] Discussions in this show should not be construed as specific recommendations or investment advice. Always consult your investment professional before making important investment decisions. Securities offered through registered representatives of Cambridge Investment Research, a broker, dealer member FINRA Civic Advisory Services.

Through Cambridge Investment Research, Inc. A registered investment advisor, Cambridge and Houston First Financial Group are not affiliated.

Welcome to Money Matters with Chris Henley, where we spotlight financial literacy issues in the Houston community and beyond. And now your host, Chris Hensley.

Christopher Hensley: Fast forward to 2025 and we're facing one of the most sweeping government workforce overhauls in decades. What was your reaction to the scale of these layoffs and restructuring efforts?

Brian Kuhn: Yeah, it's nothing like anything that's ever happened before. This is all unprecedented. When I got into, uh, helping federal workers, uh, it was the result of brack, uh, that was back in the 2006, [00:01:00] 2007 timeframe, uh, right around where I am in the, uh, in Arun County, Maryland area because we have Ford Mead and Brack was a massive project.

It was moving, uh, entire departments of federal government all over the place, and some people chose to retire as the result of. Everything going on there, this is like a hundred bracks all altogether. Uh, so, uh, it's, it's overwhelming, uh, I would imagine for the typical federal employee. Uh, just the uncertainty of it and the changing information at any given time.

Christopher Hensley: What happens when the most stable jobs in America suddenly aren't? Over a quarter million federal employees are facing layoffs, reclassifications, and buyouts, and for many, the roadmap forward is completely unclear. Welcome back to Money Matters. I'm your host Christopher Hensley, and today we're doing something we rarely do.

Bringing back a previous guest, Brian Kuhn first joined me back in 2014 when his book on federal employee benefits came out. A lot has changed since then, [00:02:00] but nothing quite like what we're seeing right now with the federal government undergoing massive workforce cuts. Early retirement offers and benefit shakeups.

I couldn't think of a better person to have back on the show. Brian has spent years helping public employees navigate retirement layoffs and financial transitions, and today he's here to help us make sense of what's happening in 2025. If you're a federal worker, know someone who is, or just wanna understand what these changes mean to our government and economy.

You're going to wanna listen to this one. Let's dive in. Brian, thank you so much for returning to the show.

Brian Kuhn: Chris, great seeing you again, appreciate it despite the circumstances of everything going on, but it's an important topic and it affects a lot of people.

Christopher Hensley: Absolutely, absolutely. You have been ever since January.

So think about that. It's in the back of my head. I'm like, oh, I need to, to reach back out to Brian. So thanks for for joining us again. I know listeners are urgent to kind of get those updates and, uh, see what's been [00:03:00] going on. So let me start with my first question right out of the box here. You joined us back in 2014 to talk about.

Federal employee benefits. Fast forward to 2025 and we're facing one of the most sweeping government workforce overhauls in decades. What was your reaction to the scale of these layoffs and restructuring efforts?

Brian Kuhn: Yeah, it's nothing like anything that's ever happened before. This is all unprecedented.

When I got into, uh, helping federal workers, uh, it was the result of brack, uh, that was back in the 2006, 2007 timeframe. Uh, right around where I am in the, uh, Anne Rental County, Maryland. I. Area because we have Ford, Mead, and Brack was a massive project. It was moving, uh, entire departments of federal government all over the place, and some people chose to retire as the result of everything going on there.

This is like a hundred bracks all altogether. Uh. So, uh, it's, it's overwhelming, uh, I would imagine for the typical federal employee. Uh, just the uncertainty of it and the changing [00:04:00] information at any given time. So it's not normal process, uh, either, uh, right. You know, federal government has extensive processes for every, how everything is supposed to go each step of the way.

And, and, uh, those aren't always being followed. So, um, and, uh, you know, so we will talk about that. But, um, that, that just adds to it.

Christopher Hensley: Absolutely, absolutely. I'd see the, the flashback there to brack. 'cause if that's when you started seeing the layoffs come online here, that's, that's, uh, very, very important here.

Many of our listeners are federal employees, or serve them as clients. Right. From your perspective, what's the most critical issue they should be paying attention to right now?

Brian Kuhn: Yeah. Critical issue. Yeah. Well, there's a few different ones that I would say are, uh, all critical. But, uh, the, the most basic one that we cover most often is simply, uh, calculating or figuring out when you are eligible to exit the government.

So you can mark that date on your calendar and [00:05:00] strive to reach that date or verify that you are already. Uh, eligible for that date. So within federal employment, and if you're a federal employee listening, I'm sure you know all this or have, have done this more recently, but there's like a standard criteria for being able to exit what's called an immediate retirement.

It's either five years in age 62, or age 60 in 20 years, or what's called MRA in 30 years. Uh, or there's an MRA plus 10 with. Some drawbacks, but it's still an option. And then there's the Vera options that have come out, which is age 50 in 20 years or any age in 25. So every federal employee is striving for some combination or some of one of those, at least one of those.

Uh, and uh, because I mean, a lot of people already knew what that was. Federal employment's very unique in that your retirement date. Is an extremely specific date to you. It's not like the private sector where you just retire. Once you get to a, a round number of money or a nice [00:06:00] round age, like 62, 65, you're uh, you don't have to leave federal government once you get to your specific date.

But yeah, you know, your. 20 years plus age. Uh, 60 or 62 is July 17th, 26. So that's what you were, uh, aiming for. So making sure your, your employment record, uh, is accurate and accounts for all service that can qualify you. Right. We we're coming across a lot of people where there's questions. Whether some time that they put in at the beginning of their career, uh, counts towards their service record or just making sure their service record has all of their time in.

And just knowing, you know, what that date is to be able to, to exit. Um, if you, if you're not eligible and something were to happen where you involuntarily left involuntarily, left it, it doesn't mean like necessarily the pension goes away. It's just that you exit the government without it being an immediate one, which is what you want generally because.

The pension starts right away, and you're, you're, [00:07:00] uh, predominantly you're eligible for the health insurance, uh, regardless of age, at the time that you exit. So that's, that's what everybody's striving for, I would say. So, checking your employment records and, and understanding what that date is and not making any rash decisions, um, that might cause you to, uh, voluntarily, um, or accidentally, uh, leave before that

Christopher Hensley: date.

I love it. Brian, you shared a lot of really good information. Uh, the idea of, of vesting, whether the person's able to do what they want, and I started writing 'em down. I was active listening. Right. I started writing 'em down. I got Vera I got, and then I stopped because there were so many of 'em. And so that, but that makes.

What that makes me think. 'cause I do TRS here in Texas. That's kind of like my area of specialty there. Yeah. But a lot of times people will think that the beneficiary options, the vesting and all of that stuff is intuitive. And just by the amount of stuff you just shared with me, I'm gonna say it's not.

The, the information that you just gave us, very, very important. You talked about [00:08:00] situations where people, involuntary left, um, making sure that that employment record is correct, right? So there's probably this window of time that if there's something wrong, they need to go back and and check. So all of this stuff that you just shared with us, super duper important for people.

I'm gonna move on to the next question here. Brian with over 275,000 federal positions impacted through layoffs, reassignments, or voluntary exit offers this year. What immediate financial steps should affected workers be taking? Yeah,

Brian Kuhn: I agree. Yeah, there's a lot, there's a lot of things that you can do. I, I think a lot of people, um, just by nature, not exclusive to federal employees, but, uh, their initial response is to the uncertainty.

I'll just keep doing my job well and, and hope that it works out and, and, uh, you know, that's one way to do it. But there's it, there are many things that you can do. You can, uh, these are in no particular order. One of the things we talk about is just rounding up liquidity. This, this would be for people who are already.

Who are, um, still employed and hoping for the best, but certainly if [00:09:00] you are, if you have been, uh, let go, God forbid, you know, rounding up liquidity. So we talk about like assets that you've been meaning to move to a cash position, you know, stock certificate, savings, bonds, CDs, uh, that sort of thing. Uh, miscellaneous assets that aren't liquid now, but, uh, could be very handy to pay bills that, uh, will eventually arrive, um, that don't have cash flow.

Um, just making, making your yourself comfortable, right? And understanding how you access your own money. Uh, that's not always clear to the average, uh, person, right? We, we might presume someone might presume there are penalties or it's just a bad idea. Uh, or taxes. Uh, right. And taxes and penalties sometimes people think are synonymous with each other, and, and they're, they're different.

I mean, a penalty is something that we strongly encourage. Avoiding taxes. Sometimes they're just difficult to avoid, but it doesn't mean you can't touch your money. Uh, so just understanding how, how accessible your money is and making it as accessible as possible. So, [00:10:00] um, should there be bills that need to be paid?

Uh, another thing is, um, checking with hr. Now HR is very difficult to get ahold of across every major agency. Every agency of, of the government right now. But, um, certainly being in line, um, to make sure your employment record is, is accurate and making sure you understand, um, your ability to exit as necessary or what would happen, uh, if you, uh, needed to submit a retirement application.

Uh, we've had instances where people have. Have, you know, gone through a retirement application as like a practice run, right? Mm-hmm. Because it's, it's set, you know, if you do a physical one, I, I was, see, I was shown one, it's like 14 pages long to retire. So they make everybody do it online, uh, for the most part now.

And there's, I've seen them, I mean, they're, they're pages and pages that you're. Clicking through. So just going through that as a practice run. Uh, there's all sorts of third party professionals that you can talk to. Uh, hopefully you have the time to do that while you're still [00:11:00] employed. That's not easy.

But, um, there's, uh, there's financial advisors obviously, but there's tax advisors on understanding, accessing your money. Uh, there's career counselors. You know these when you go into the federal government, more so in the private sector. There is tenure, right? Once you go in, you don't really leave, uh, you don't, uh, people don't just bounce in and out of the government.

You kind of, you go in and you're there for, uh, or it used to be that you would go in for, you know, 15, 20, 30 years and, and that's where you would end. Um, so, you know, networking and finding a new job, uh, those sorts of steps aren't, aren't natural. Always, um, to the typical federal employee. So talking to like a career counselor, somebody that builds resumes and LinkedIn and, and, uh, and you might have to shop around for that particular profession because you're looking for somebody that's unique to your industry, ideally.

Uh, so, and then there's also in the world of federal employee benefits. A position beyond what we do, uh, called a federal employee [00:12:00] benefits specialist. Uh, so these are typically like former HR representatives that worked in the government and now they're, they're, uh, semi-retired consulting or, or running their business where they make sure your, uh, records are accurate and running analysis and, uh, so that's another profession you can seek out.

So these are all people that. And, and these are just individual occupations. There's all sorts of advocacy groups and, um, every state, uh, local to me, uh, Maryland, DC and Virginia have all set up, uh, portals, uh, with all sorts of helpful websites, uh, of, uh, like organizations that are offering free legal consulting or free, uh, career consulting.

Um, or assistance with how to file for unemployment if you're eligible for that based on the method that you exit, uh, the government should that occur. Um, so there, you know, the, it's rallying around, um, all of these folks to offer as much, as many resources as possible is definitely happening.

Christopher Hensley: So I. I love it.

I love it, Brian. A lot of really good information. In fact, I break it into [00:13:00] two different areas. 'cause the first one, uh, part you told us about things you can do individually, like running, you know, rounding up liquidity, uh, how, just learning how to access your own money, right? Because a lot of times there's.

Questions in there is like, how does that work? Doing this before you need it is the right thing to do. And then the, the resources that you gave us, and there was a whole list of 'em, the first one you said was Check with hr. A lot of times people forget that step and they're just like, all right, time to do it.

So reaching out and, and giving them some of these. Hypothetical what ifs. Now the HR person may point you to some of these other people that you mentioned, right? Uh, the career counselor, uh, the, the federal employee benefit specialist. A person who's, who's been, uh, who's studied or, or has been ex-employee, federal employee, that sort of thing.

Who's specializes in this, uh, very important, uh, CPA if there's tax questions and advisors as well, right? Financial advisors like ourselves. They're, uh, Brian's the guy though, so, so if you're a federal person and you have these. Questions. He's been down this road quite a [00:14:00] bit, so he's a, a, a good resource for that.

Um, I'm gonna pivot now and ask about job security because that's one of the things that we alluded to is as you kind of get going and you've got in the past. Sorry, I noticed a few more gray hairs from last time. I've got more gray hairs. You've got more gray hairs. Yeah, that happens. It's funny. It's funny, but so, you know, in the past people have gotten these federal positions and you think of postal workers and they've been there.

For years and, and they're tenured almost like these college professors. But job security has become a real concern, especially with civil service protections being reevaluated. What should federal employees near retirement doing now to safeguard their plans?

Brian Kuhn: Yeah, well, if you're near retirement, even if you're not anybody but near retirement, the first thing that comes to mind to me is building a retirement model, right?

A cash flow projection, just like you build, uh, for folks, because that's, it's, it's a wonderful exercise. Uh, I say wonderful as though it's a positive thing, and I think a lot of people assume if they [00:15:00] did that, they would get bad news, right? And, and that's not always the case. In fact, more often than not, those cashflow models will be more favorable.

Than, than someone might think. And it under, there's not a circumstance that we're, uh, going through where the, the pensions, I, I mean, no, not nothing can be guaranteed, but where the pensions are just like, not occurring or, or not, uh, they're going away, for example. So those are still a, a valuable asset. Um, that it would be built into your retirement model?

Could it be lower, uh, a, a lower amount than we wanted, uh, because it's starting earlier. Um, could we end up leaving the government under what's referred to as a deferred retirement where it's not starting immediately and we have to find another form of health insurance? Could the supplement go away? Uh, yes.

All yes. But the retirement model, that exercise allows us to run through scenarios. We can change real time. What happens if, uh, right? What happens if we left the job [00:16:00] tomorrow? What happens if the supplement wasn't there? What happens if there's a rule change and we now have to pay more for our FEHB throughout retirement?

What happens if they change from a high three to a high five? These are all examples of, uh, rumors, uh, or, or, uh, potential changes that are being discussed in in committee, in the house and so forth that the federal government employees are very closely, uh, following. We are too, but I. Um, and, but you can see real time what the result, uh, is.

And, uh, and it's a healthy exercise. It's a, it's a good step, uh, especially if you're anywhere near, uh, retirement. The second thing that comes to mind is you, you don't have to be near retirement. It might just be that you are, I. Closer to the end of your federal career than you realize, uh, or that than you want to be.

Um, right. A lot of federal employees speak in terms of the mission of the agency, uh, and, and it's wonderful, uh, how they communicate like that. I don't, uh, get as many private sector employees who speak about their, you know, their [00:17:00] particular mission of their, uh, company's, uh, department. But so they don't want that mission or project or thing that they're working on, uh, to end.

They're, they're providing value to, to our country. Uh, but um, but so the federal career could end theoretically earlier than they wanted to, but that doesn't mean their working career needs to end. It's just looking into what's possible, you know, looking into your industry and the status of it, and where hiring is occurring and.

And, uh, uh, potentially other industries that you wanna work in entirely. You know, have people who go end up working in the nonprofit world or part-time or, or just doing something hourly that's stress free. Um, just for the extra walking around money. Not because the retirement model says it's necessary, but because you wanna stay active generally, that's a good thing.

As you transition to retirement, we've all, you know, heard that in studies and things that, uh, staying active and staying involved is, is actually good for us. So. Um, that's, that's encouraged regardless of what [00:18:00] the model says. It's just a matter of where it's going to be. So looking into that ahead of time is helpful.

Christopher Hensley: I love that. I love that. Now you are in a unique position where people are coming to you, and this is throughout your career, it's been people in this kind of the same situation where they're retiring from the federal government. They have something that you've, you're, you know, that's unique and that you're an expert at.

And what's changed now is that there's this, this. You know, mass amounts of, of people who may not have thought about it. Uh, but as this is coming online and it's real, and we're, we're seeing people let go, uh, they're thinking about it now. How do you counsel these federal workers who are in this limbo, kind of unsure if they're next or waiting on word about possible reclassification or departmental cuts?

Brian Kuhn: Yeah. Uh, well, um. A lot of, you know, as I, I'm thinking about how I want to answer that, uh, there aren't as many people that I'm seeing personally that have [00:19:00] actually, uh, left employment where they are entirely separated from the government. Yet despite all of the news stories, right? If you were to read the news stories, the impression you would get is that tens of thousands or hundreds of thousands of federal employees currently no longer work for the government.

Uh, today, right? Uh, and that, and some of that is true, but that isn't, uh, as true with, uh, as large of a quantity as we might think. So what's happening is people have, uh, signed up for the DRP, uh. The deferred resignation program, which again, didn't exist four months ago, but now it does. Right. Uh, and what that means is their retirement date, uh, or separation date at least, is in the future, typically like September 30th or some date in the future.

Or they have voluntarily retired because they've been meaning to, anyway. So this is, this is their time, this is their reason. So they have a future retirement, uh, date. Or, um, they're part [00:20:00] of a rif, so a reduction in force, which is floating through many agencies. Uh, and there's supposed to be a process for that that takes a little while with a 60 day notice and things and, and many other rules.

Uh, so that is not like immediate. And then you have other situations where there was a termination, but now there's, uh, a variety of lawsuits. Going on related to the legality of that, um, termination, like probationary employees. So, um, so it's all working its way through the system and we, you know, there's updates of news articles practically every day on, um, some sort of court decision that's now being appealed and, and making its way through, uh, everything.

So. There are many people that just as you said, they have a lot of uncertainty, but they are still employed at the moment. So in that case, you know, things come to mind like, just keep doing your job well, and you can do all sorts of planning like we've talked about, while the paychecks are still arriving.

That's good. And uh, just, uh. Um, help relieving [00:21:00] stress with coworkers, you know, keeping in touch with them while they are still your coworkers. Um, and looking into these other professions that we talked about, uh, in case there is any value, checking in with a federal employment law attorney is, is something I say on a regular basis.

Mm-hmm. Because you want to. Protect yourself and your rights. And, and that's a whole occupation, that's a whole, uh, industry within, uh, the legal community where there are attorneys that specialize in representing, uh, federal employees, uh, whose rights have been infringed. So checking in with them just to make sure you know who you're going to be working with if, if something were to occur.

Uh, so there's, there's a lot of things that, uh, you could be doing.

Christopher Hensley: I love it. That's great information that the next question I was about to ask you, you've kind of led into it already, so let me go ahead and ask it. Uh, for those receiving early retirement or buyout offers, what are the key financial questions they need to ask before making a decision?

You mentioned a document that I had not heard of that you said didn't exist until January. [00:22:00] Maybe tell us a little bit more about that and then expand on that as well. Yeah.

Brian Kuhn: Yeah, so the DRP, so the deferred resignation, uh, program, so this was the fork in the road email that came out on January 28th. And, uh, it's, it was, so the email arrived from, uh, OPM, which is not how HR related topics generally arrived to people.

It goes through your agency like, like federal employees will communicate, their employer is their agency. They won't generally say. I work for the federal government, they'll say I work for HHS or DOD or uh, state Department, you know, so, um, so that was unusual. And then there weren't really any details of the, of, uh, how it was supposed to work.

It was only started to be explained about a week later. Um, there's since been a lot of. Uh, clarity, not entire clarity, but, um, uh, but, uh, so anything to do with the DRP? My first step is to see a federal employment law attorney. That should be said, uh, because it's new. And there, there are forms that are being [00:23:00] asked to sign, uh, that in some cases, uh, can, can.

Waive, uh, certain rights that you are entitled to. Um, now, I mean in, in some cases, if you're planning on retiring anyway, and it's just under this incentive program where you get some conveniences, people are right, uh, are able to make their own decision. But, um, that's what we are telling people. Uh, but uh, it's basically a program where you can have an opportunity for some administrative leave, meaning not needing to commute into the office.

'cause we have, you have the return to office mandate. And continue to get paid for a period of time, followed by, um, exiting your, your federal, uh, employment. That's, that's a general, uh, oversimplification of what the offer is. But, uh, so, um, and it was also being made. It made, it was made a couple times. And there was limited timeframes, uh, to make the decision, which of course is not, you know, that's not really ideal for anyone.

But, uh, that's how it was happening. [00:24:00] So, uh, if, if anyone was in that position, it is just, you gotta, I guess the best advice I could offer was to move quickly, to try to gather as much information as you could to, to make a decision. So.

Christopher Hensley: I love it. I love it. Great information for people who were either in that situation, in that situation now, or maybe in that situation in the future.

Um, you know, we, we have seen several legal challenges to this year's restructuring efforts. Things have come up in court. People are challenging some of this stuff from a financial planning angle. How should federal workers factor that uncertainty into their next steps?

Brian Kuhn: Yeah. So the, the changes to federal employee, uh, benefits is one thing that has, uh, come up a lot more recently and, and what I would say is it I would be hesitant to make any major life or career decision based on a rule change that might happen.

Right. Might happen, but has not, uh, set in stone, uh, as of yet as a [00:25:00] law. So I always, I give the analogy, um, you probably around, you recall this, perhaps back when George Bush was in office back in 2005, 2006, he had just got reelected and he, they came out with this program where they were going to replace.

All retirement plans by consolidating down them down to three different things. Right? Remember the 401k? 4 0 3 B-T-S-P-I-R-A, Roth IRA health savings account. They were all gonna go away and we would just have three, right? And it was gonna be great. And I was in operations at the time, so I was doing paperwork, so I love the idea.

Um, and there was, you know, it was in the house and they came out with this chart and I put it on my board. And we had meetings about it, and then what happened? It didn't pass right. It didn't, it didn't happen. Um, so it was, so that's, that's an analogy for anything that's floating around in a house bill.

Right? There's a lot of bills proposed and news stories about 'em and potential changes. And then, and then sometimes they don't happen. So examples of these potential changes are, I listed some of [00:26:00] them, but there's the, the change from a high three to a high five, and there's the removal of the supplement and there's paying more for your pension if you started before 2014 and, uh, and, uh, change making you pay more for your health insurance and becoming an at-will employee or paying even more for, um, your pension.

Those are the, the broad examples of that people are following. And they might happen. We can't say that they won't, uh, but, um, some of them have been backed off. Uh, and some of them, you know, if they go through, they're scheduled to start in the future. Like one of 'em would start, uh, January 1st, 2027. Uh, again, that's not a guarantee that that's when it's going to start.

That's just in the news. Um, so making any major decisions based on that, I, I would, I would hesitate, uh, to do, but again, what you can do. I would encourage you to do is look at your plan as though it happened, right? That's what we can do. We can say, okay, if this change went through, this is how [00:27:00] your, uh, retirement model or your pension would change, like the high three to a high five.

That's just math, right? We can take what your earnings history will have been and take the high five, uh, of it, and then divide that into your pension as opposed to a high three and say how your pension would change it. It wouldn't be an official number, right? That's gonna come from hr, but we can do the math and, uh, and, and we've done so, and uh, in, in many cases, it, it doesn't.

It, it does reduce it. Uh, but it, it, it's not like it's cutting in half or anything, uh, in, in many cases. So, um, so we don't, you know, on behalf of federal employees, we don't want it to go through. But that would be, that would be, uh, a potential action item as opposed to, uh, choosing a retirement date or exiting employment that you don't want to do, uh, without it being official.

Christopher Hensley: I love it. Brian, we are right here at the end of the show. That was the fastest 30 minutes ever. Uh, thank you for, for being on the show today. Is there anything I have forgot to ask you that [00:28:00] you'd like to share with listeners today? I. I

Brian Kuhn: don't think so. That was typically what, uh, what we cover when I'm, uh, talking to colleagues and, uh, there's a lot to it.

Uh, you know, I'm, I'm just, we're both, are I guess, just striving to offer federal employees a big virtual hug because, uh, yes. Uh, this isn't easy and, uh. This probably wasn't the plan for, uh, how your federal career was, uh, was scheduled to, to end. But, um, and we, and we hope that, uh, whatever that date you have in mind, you still reach it if you wanted to.

But, um, but, uh, that's what's going on and, uh, we can keep in touch and, and happy to, uh, come back and report. I

Christopher Hensley: love it. I love it. Brian, for listeners who wanna reach out to you, how can they contact you?

Brian Kuhn: Yeah, main way email, so B kon at wealth enhancement uh, dot com. I'm on LinkedIn, uh, or wealth enhancement.com is our corporate, uh, page and you can look me up.

And then phone number is (301) 543-6035. Perfect. Brian, thank you [00:29:00] so much for joining us today. Have a good rest of the day there. Alright, you

Christopher Hensley: too. Thanks Chris.