furlough

Wow! I just figured out what the furlough means to my budget. My hourly pay is about $30 an hour: that’s $240 a day. If they make me take one unpaid day a week for the next 12 weeks, that’s a gross pay cut of $480 per paycheck or $960 a month. My net biweekly pay will drop from $1,537 to $1,215. That is less than my reduced budget for nonmonthly recurring bills (i.e., it’s less than I spend on groceries, household and yard products, gasoline, and nonrecurring bills such as the vet or the plumber).

It’s less than I would earn if I retired, took Social Security and 4% of my savings after the Investment House mortgage, freelanced, and taught two sections of freshman comp at a community college.

Now, there are some mitigating circumstances here.

First, that retirement net income doesn’t reflect the astonishing cost of Medicare, which, by the time you pay for Part D (the required prescription insurance that drops you into a “doughnut hole” if you get sick enough to really need a lot of medications) and the supplemental insurance needed to pick up the slack, comes to around $300 a month. Right now I pay $26 a month for a plan that covers everything, including the Mayo Clinic and prescriptions, with $10 or $20 copays. Because I’m not yet at Medicare age, if I quit now I’d have to take COBRA, which will cost $475 a month.

Second, the fact is that today we get our so-called “extra” biweekly paycheck. It can be prorated out over the next twelve weeks to help cover the shortfall. It means I won’t be able to use it as part of my emergency savings in case of layoff—which, frankly, I believe is a near certainty. However, it will help.

And third, we can claim unemployment for each furloughed day. That will be a HUGE hassle: you apparently have to fill out all the forms and jump through the hoops for every single claim. So it may not be worth the trouble. But it’s there.

Any way you look at it, the “golden years” of my life are going to be pretty gray. You can see from the above that the amount I will have to live on under the best of circumstances—working two part-time jobs—will be very limited. When I reach the age when I can no longer work, which won’t be many more years from now, I will be living in poverty. Even after we sell the Investment House and I can use the full 4% drawdown from my life savings, the numbers look like this:

I can’t even begin to imagine how I will live on that, with $300 (or, by then, more) taken out for Medicare.

Well, one good thing about this furlough business: starting today, I’m going to get some practice at living on it.