Navigating Financial Uncertainty: A Guide
for Federal Employees

In today’s shifting job market, uncertainty is a constant companion, especially for federal employees. Concerns about job security, hiring freezes, and the broader economic climate can make it difficult to plan for the future.

You're not alone. About 700 attendees joined CFP Board’s webinar for federal government employees, “Managing Your Finances in Uncertain Times.” Additionally, more than 200 CFP® professionals have offered to provide pro bono or reduced-rate financial planning services to federal government workers. 

Many of my clients are federal employees or are married to one. My husband is a federal employee. I know how stressful this moment is. 

In addition to the resources CFP Board offers, I’m sharing the below advice — because you deserve to feel informed and empowered, not stuck in anxiety.

Step 1: Gather the Data

The first step in responding to uncertainty is understanding your full financial picture. It’s not fun, but it’s necessary.

Your first step should be to list all your income sources, including: Paychecks (you and your spouse or partner, if applicable), portfolio income, alimony or child support and VA or disability benefits. Make sure to note net income, not gross, so you know exactly what’s hitting your bank account every month. Next, flag any income sources that may be at risk. 

Expenses

Look at your credit card and bank statements from the past three to six months. It might be uncomfortable but resist the urge to spiral into shame or guilt. You're just gathering data.
Tools such as your bank or credit card’s annual spending summary or apps such as Monarch Money can help you analyze your spending. Look for averages and trends and focus on understanding your normal monthly spending.

Assets

Next, review what you own. Group them by how accessible they are. Think in this order: 

• Cash equivalents – Checking and savings accounts, certificates of deposit
• Investment accounts 
• Roth IRAs
• Pre-tax retirement accounts – For example, traditional Thrift Savings Plans (TSPs), which are generally a last resort because of penalties and taxes

Step 2: Make a Contingency Budget

Once you know your numbers, create a bare-bones budget. You’ll want to exclude discretionary spending such as vacations, subscriptions and dining out, because it’s unlikely that you will continue to spend at the same level in the event of a job loss. Include essentials only such as rent or mortgage, utilities, groceries, transportation and health-care costs. 

Once you have your monthly survival number, compare it to your liquid savings. For example, if your bare-bones budget is $6,000 per month and you have $36,000 in savings, you have six months of runway. That’s your breathing room.

If you come up short, identify ways to close the gap. You could cut non-essential expenses, sell items you no longer need or consider picking up freelance work to bring in additional income. I find that this process can shift your mindset from panic to preparation.

Step 3: Understand Your Retirement Options

Now that you’ve handled the immediate concerns, let’s talk retirement. Do not make drastic decisions out of fear, like taking full distribution from your TSP. That can come with a 10% penalty and hefty income taxes, slashing your retirement savings substantially.

You have two options when it comes to your TSP: You can choose to leave it where it is, or you can roll it over to an IRA if you want more control over your investment mix. Either choice is valid, depending on your goals and comfort level.

Lastly, you should request a pension projection from the Office of Personnel Management (OPM) or your agency. This will allow you to confirm how much creditable service you have and what your benefits might look like. This can help you adjust your retirement plan with clear expectations.

Step 4: Plan for Health Insurance

Health insurance is a major concern during job transitions. You may be eligible for continuation of benefits, but they often come with higher premiums. You can choose to join a spouse’s or domestic partner’s plan (if their employer allows it) or opt for COBRA coverage of your existing plan (expect that your out-of-pocket costs will be higher, even if coverage remains the same).

Taking these steps will help you feel more in control during uncertain times. But if you’re feeling overwhelmed or unsure, you’re not alone. More than 200 CFP® professionals have volunteered to offer no-cost or reduced-rate services to federal government employees; access the list of volunteers on https://www.cfp.net/fedworkers. Whether you decide to navigate this on your own or seek guidance, create a plan and execute it — because your financial security is too important to leave to chance.