What impact will a Federal Shutdown have on my 401K plan?


It’s a very good question.  If you follow your plan as closely as I follow mine, it is something that might cause us to lose sleep. 

Doug Elmendoff  is the director of the Congressional Budget Office.  It’s safe to say this guy doesn’t take political sides. 

He says "The effects build over time: Two weeks is worse than one week, and three works is still worse than two weeks, and four is still worse than that."

Mark Zandi is the chief economist and co-founder of Moody's Analytics.

Marks guesses a shutdown that lasts just a few days might cost the economy two-tenths of a percentage point.  In our language, that’s a smidge.  But if this thing lasted three or four weeks Mark says it could reduce GDP by 1.4 percentage points.

In the 1995 shutdown stocks fell an average 3.7 %.  The next month they made it all back and more.    I am no economist but I have always heard you own stocks for the long term.   I did check my plan last night, and I will keep a running tally of how much I lose.  I will let you know.

If you insist on some financial advice, I have some.  Call an expert and do it today!