The views presented here do not necessarily represent those of Advisor Perspectives.
After a year marred by federal job cuts, government shutdowns, and still more uncertainty ahead, public sector workers are looking for advice that will help them quell anxieties around their financial future. Autumn Knutson, the founder and lead financial planner of Styled Wealth, has a number of clients in Washington D.C., who are weathering, or hawkishly watching, upheaval occurring in the government sector.
“This is something that we talk about — any level of uncertainty,” Knutson said in an interview with Advisor Perspectives. “And certainly, if you're working in government these days, there’s a lot of uncertainty and sudden changes that are happening.
Because of that, she is recommending that clients increase their emergency funds. In addition to job security concerns, some government workers may deal with low morale caused by the turbulence, making a larger emergency fund critical.
“The morale and the level of work that you have can change, and it can feel like a different job than the one you had three or five years ago,” Knutson said. “We do recommend a full emergency fund. Now, ‘full’ might be six to 12 months of expenses, whereas before it might have been three to six months of expenses saved.”
“We’d go to the higher side of that range if (a client is) more risk averse, or if it would be harder for them to find something comparable at their income level,” if they lost or left their job, Knutson said.
“That reduced volatility following an immediate change is undervalued – until you need it,” she added.
Flexibility Is Key
Advisors may need to amend their wealth management or financial planning strategy, if many of their clients work in the public sector, or are based in geographic locations unevenly impacted by government cuts or mandates.
For clients in this sector, Knutson said that putting more funds into taxable brokerage accounts could help them “put their money to work.”
“Yes, they will get taxed on those investment gains. But they can take the money out any time they want and it’s still flexible,” as opposed to having to take money out of a retirement account early, she said. Then they would face taxes and early withdrawal penalties.
Sometimes individuals get too caught up in padding their 401(k)s when markets are up, or chasing higher returns by making riskier investments in alternatives, according to Knutson.
“If we try to go too fast too soon, we can actually end up taking two steps forward and three steps back. There’s more penalties that come from that, if you get laid off, and need to withdraw from those kinds of accounts.”
“When you take on more risk, without having a strong or stable foundation, then the risk of you needing to take money out in a non-tax advantaged way can increase, when you have a lower emergency fund,” she added.
Guaranteed Benefit? Changing Times.
While most government workers receive pension funds, these defined benefits still need to be incorporated into each individual’s unique financial plan and retirement needs.
For advisors, “it’s helpful to know (clients’) benefit structure and help them optimize that,” Knutson said. “Do they have a pension coming their way? And if so, how long before they receive that? Is their job grant-funded, and if so, how long before that runs out?”
These factors are increasingly important as today’s workers are prone to hold more roles across the span of their career — whether by choice or due to upheavals in the current workforce.
Recent government job cuts, which also included voluntary resignation packages, notably had a spillover effect on retired workers whose pension benefit payouts were delayed. This was the case despite workers opting into the Trump administration’s deferred resignation program, according to a January report by Money Digest.
“More than 154,000 employees took the Trump administration's deferred resignation program (DRP), which provided months of paid leave in exchange for agreeing to leave work on September 30, 2025,” the article said. “Employees who took the deal make up just part of the 317,000 people who left federal employment in 2025…But now, a lot of those former federal employees have yet to receive their retirement benefits, and a huge backlog is to blame.”
On the general state of affairs for public sector workers, Knutson said: “There’s just not that same stability of staying at your job for 10 to 20 years and getting a pension. There’s so many more chapters to people’s careers. And some of those chapters may be ones they decided, and ones they didn’t.”
She added, “If an advisor is trying to help more clients in the government sector, the days of someone staying somewhere over the course of their entire career is aspirational,” but certainly not a given.
“You may want to look at their transferable skills and whether your client can consider similar work in the private sector,” Knutson said.
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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The views presented here do not necessarily represent those of Advisor Perspectives.
