Federal Employees Bracing for Second Round of Sequestration, First Command Reports
FORT WORTH, Texas--(BUSINESS WIRE)--The majority of federal employees and their families doubt that lawmakers will take appropriate actions to avoid a second round of sequestration in the coming year, according to the First Command Financial Behaviors Index®
“Not only have recent events caused federal employees concern about their current financial situation, they are now more uncertain than ever in their ability to achieve their long-term goals and dreams”
In a late September survey taken immediately before the government shutdown, 90 percent of middle-class federal employee families (those with household incomes of at least $50,000) said there were not confident that lawmakers will be able to take appropriate action to avoid another sequester in the new fiscal year, which began Oct. 1. This lack of confidence compares to 83 percent of military and 73 percent of general population families in the same income range.
“While Congress has taken some actions to protect military pay and benefits, the weight of sequestration, government furloughs and federal budget cuts is falling hard on our federal workers,” said Scott Spiker, CEO of First Command Financial Services, Inc. “In recent years federal employees have seen their pay rates frozen. Many have experienced furloughs without pay, either during the summer or the recent government shutdown or both.”
Seven out of 10 federal workers report that government furloughs have negatively affected their families. When asked about the effects of the furloughs that took place before the government shutdown, respondents said they:
- Did not receive bonuses due to spending cuts (44 percent)
- Experienced hiring freezes (35 percent)
- Experienced unpaid furlough days (33 percent)
- Were restricted from working overtime due to cuts (30 percent)
Notably, roughly three out of five federal employee families say they feel extremely or very anxious about sequestration. They have been responding in a variety of ways, including:
- Cutting back on every spending (51 percent)
- Increasing the amount they are saving (17 percent)
- Decreasing the aggressiveness of their investments (11 percent)
During the recent government shutdown, First Command Financial Advisors reported seeing an increase in federal employees seeking financial guidance and support.
“Not only have recent events caused federal employees concern about their current financial situation, they are now more uncertain than ever in their ability to achieve their long-term goals and dreams,” said Robin Jones, CFP®, who is head of the company’s Evans, Ga., office. “We are seeing a significant increase in interest by federal employees in working with a financial advisor and gaining more knowledge about their benefits.”
John Olson in the company’s Annapolis, Md., office said sequestration is testing the household budgets of federal employees.
“Clients are taking a hard look at their finances and in many cases they are bumping up their savings rate,” he said. “They want to make sure if anything like this happens again in the future, they will be ready.”
In First Command’s Silverdale, Wash., office, Peter Carlo saw a lot of concern and worry during the government shutdown among federal employees who support the Department of Defense in Kitsap County, Wash.
“Many of these folks are prior military and have come to expect their government pay checks like clockwork,” he said. “Even though they were told these possible conditions may occur, it is very hard to change habits. Those who truly listen and accept our coaching have taken precautions and are prepared. Many, however, are not prepared and fear losing their homes and their ability to cover their monthly requirements. I have received many calls to discuss how to maximize monthly cash flow. Clients are stopping their investments and asking for clean budget sheets to be sent to them so they can take a hard look at the bills that must be paid versus the bills that can wait. Some are just plain angry and scared. It is a time when everyone needs to constantly make those daily decisions on what to buy and what not to buy.”
Bob Hill, head of the company’s Arlington, Va., office, said he saw a significant number of federal clients seeking help with their retirement plan investments during the shutdown.
"Some federal workers are asking us to temporarily reduce or discontinue their regular contributions in order to keep their household budgeting on track," he said. “We’ll continue to work with them to ensure that they revisit their financial situation and, when the time is right, resume the pursuit of their long-term goals.”
The Index surveys have consistently revealed that financial planners can have a positive impact on feelings of financial security and confidence, Spiker said.
“Financial planners coach their clients to spend less, save more and adopt other positive behaviors,” he said. “They can play a critical role in helping middle-class families achieve both near- and long-term goals in the pursuit of financial security and feeling more confident about the future. They are ideally equipped to assist federal employees in their efforts to get their family finances squared away during this uncertain period.”
About the First Command Financial Behaviors Index®
Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. www.firstcommand.com/research
About Sentient Decision Science, Inc.
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.
About First Command
First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.
First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), First Command Insurance Services, Inc. and First Command Bank. Financial planning services and investment products, including securities, are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Insurance Services, Inc., in all states except Montana, where as required by law, insurance products and services are offered by First Command Financial Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. In certain states, as required by law, First Command Insurance Services, Inc. does business as a separate domestic corporation. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met. First Command Educational Foundation is a 501(c)(3) public charity. It is not affiliated with First Command Financial Services, Inc., or any of its affiliated entities. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP (with flame logo)® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.