First Command: Q3 2009 Federal Employee

1. First Command: Q3 2009 Federal Employee First Command Financial Behaviors Index

2. Research Design • Survey • 15-minute interview with federal employee households • N = 412 (September ‘08 N = 412; March ‘09 = 414) • Margin of error: +/- 4.8% • Primary Objectives: • Track financial attitudes, behaviors and intentions among federal employees

3. Financial Behaviors Index Insights Feelings of financial security, financial optimism and retirement confidence have all increased from Q308 to Q309 among federal employees with a financial plan. Interestingly, those extremely / very confident that their financial situation will improve in the future increased from 18 percent in Q308 to 42 percent in Q309 among those with a financial plan, while the percentage of federal employees without a financial plan who are confident that their financial situation will improve has remained relatively constant (23 percent in Q309). A similar percentage of federal employees (13%) feel very stretched / stretched to the absolute limit as the general population (15%). Notably, only seven percent of those federal employees with a financial plan feel financially stretched in Q309. While federal employees without a financial plan reported similar feelings of comfort with their current savings in the past year, feelings of comfort have doubled among those with a financial plan. In Q309, 19 percent of federal employees with a financial plan feel extremely or very comfortable with their currently savings compared to only 9 percent of federal employees without a financial plan – a 10-point disparity. A similar disparity exists between the two groups this quarter in terms of comfort with current debt levels. The percentage of federal employees concerned about the state of the economy has dropped over the past 12 months, from 69 percent in Q308 to 60 percent in Q309. Not surprisingly, federal employees are less likely to be concerned about job security (20%) than the general population (31%). Federal employees are also slightly less likely to feel extremely or very stressed (20%) about the current economic situation than the general population (23%), and they are slightly more likely to believe that the U.S. economy has hit rock bottom and is on its way to recovery (45%) than the general population (41%). Average amounts put into short-term savings, long-term savings and retirement accounts all increased among federal employees from Q109 to Q309. Strikingly, the amount put into retirement accounts increased dramatically in the current quarter. Federal employees increased their contributions from an average of $749 in Q109 to an average of $1,388 in Q309. Interestingly, federal employees are significantly more likely to agree with the statements, “It is important to plan for the future by consistently saving and investing a percentage of income” and “Having a financial plan helps provide a sense of security” than the general population, but they are also significantly more likely to agree with the statements, “Financial service professionals pressure people to put away more money than they can afford” and “The fees and costs of working with a financial planner are not worth the benefits gained.” 3

4. First Command Financial Behaviors Index – Federal employees 4 4

5. First Command Financial Behaviors Index: Attitude, Behavior and Intention sub-indices – Federal employees The jump in the Behaviors Sub-Index in Q309 is largely due to a 85% increase in the amount put into retirement savings from Q109 to Q309. The amount put into short-term savings and long-term savings also increased. 5 5

6. Financial Security – Federal employees FBI02: How financially secure do you feel month to month? 6

7. Financial Optimism – Federal employees Financial optimism has rebounded among federal employees with a financial plan from Q308 (18%) to Q309 (42%). FBI02A: How would you rate your confidence that your financial situation will improve in the next year? 7

8. Retirement Confidence – Federal employees Retirement confidence is also up among federal employees with a financial plan in Q309 (36%). FBI03: How confident do you feel about your ability to retire comfortably? 8

9. Financially Stretched – Federal employees Notably, only seven percent of federal employee households with a financial plan feel financially stretched this quarter. 15% of the general population feel financially stretched in September 2009. FBI04: How financially stretched do you feel month to month? 9

10. Comfort with Current Savings – Federal employees A greater percent of federal employees with a financial plan feel extremely or very comfortable (19%) than those without a plan (9%). SAVE: How comfortable do you feel about the amount of savings you currently have? 10

11. Comfort with Current Debt – Federal employees Feelings of comfort with debt levels remained consistent from Q109 to Q309 in federal employees with a financial plan, but did increase slightly among federal employees without a financial plan. DEBT: How comfortable do you feel about the amount of debt you currently have? 11

12. Comfort with Current Life Insurance Coverage Q309 – General Population Q309 – Federal Employees LIFE: How comfortable do you feel about the amount of life insurance coverage you currently have? 12

13. Financial Concerns – Federal employees 31% of the general population are concerned about job security in September 2009. FBI05: Which of the following financial issues concern you the most? | Total Mentioned 13

14. Short-term Savings – Federal employees FBI06A: How much money did you put into savings and investment accounts last month? Short-term (savings accounts, CDs, liquid money market funds) 14

15. Long-term Savings – Federal employees The amount of money, on average, federal employees put in long-term savings increased among both respondents with and without a financial plan from Q109 to Q309. FBI06B: How much money did you put into savings and investment accounts last month? Long-term (stocks, mutual fund, bonds, college savings 529 plan) 15

16. Retirement – Federal employees The amount of money, on average, federal employees put in retirement savings increased dramatically from Q109 to Q309. FBI06C: How much money did you put into savings and investment accounts last month? Retirement (401k, 403b, Simple IRA, Personal IRA accounts) 16

17. Savings and Investments Intentions – Federal employees FPI6d: Will you increase or decrease the amount you put into savings and investments next month? 17

18. Short-term Debt – Federal employees FBI07A: How much did you pay on your short-term and long-term debt last month? Short-term (car loans, credit card debt, etc.) 18

19. Long-term Debt – Federal employees FBI07B: How much did you pay on your short-term and long-term debt last month? Long-term (mortgages, student loans, home equity loans/lines, etc.) 19

20. Debt Reduction Intentions – Federal employees Increase amount pay on debt Decrease amount carry on debt FPI7c: Will you increase or decrease the amount you pay on your debt next month? FPI7d: Will you increase or decrease the amount of debt your carry next month? 20

21. Level of Stress About the Current Economic Situation Q309 – General Population Q309 – Federal Employees FBIMar1: Please indicate your level of stress concerning the current economic situation in the United States. 21

22. Has the U.S. economy hit rock bottom and is it on its way to recovery, or will the U.S. economy continue to fall deeper into a recession? Q309 – Federal Employees Q309 – General Population FBIMay1: Has the U.S. Economy hit rock bottom and is on its way to recovery, or will the U.S. economy continue to fall deeper into a recession? 22

23. How long do you think you will continue to cut back on spending? Q309 – Federal Employees Q309 – General Population FBIFeb4: How long do you think you will continue to cut back on your spending? | Among respondents who have cut back 23

24. What has your household experienced?: Q309 – Federal employees FBIDec1: What, if any, have you or someone in your household experienced as a result of current economic conditions? | Total Mentioned 24

25. How have you cut back in the past year?: Q309 – Federal employees FBIDec2: How have you cut back in the past year? | Total Mentioned 25

26. Agree / Disagree: Uncertainty Federal Employees General Population FBIMar2-4: Do you agree or disagree with the following statement … ? 26

27. Agree / Disagree: Financial Plans Federal Employees General Population It is important to plan for the future by consistently saving and investing a percentage of income Having a financial plan helps provide a sense of security Individuals who have a financial plan are doing the right thing for their financial future Financial service professionals pressure people to put away more money than they can afford The fees and costs of working with a financial planner are not worth the benefits gained Having a financial plan makes it hard to have enough disposable income on a monthly basis FBIMar5-10: Do you agree or disagree with the following statement … ? 27

28. Agree / Disagree: Control Federal Employees General Population I take pride in being able to do everything myself I tend not to seek outside advice for the decisions I make in my life It is important to surround yourself with people who have expertise in areas that you don’t Delegating responsibility is an effective way to manage FBIMar11-14: Do you agree or disagree with the following statement … ? 28

29. Agree / Disagree: Fear Federal Employees General Population I am very concerned about losing my shirt in the stock market Now is a great time to invest in the stock market I am concerned about getting caught up in a scam and losing my retirement investments I get a strong sense of security from knowing that my money in the bank won't depreciate in value FBIMar15-18: Do you agree or disagree with the following statement … ? 29

30. Agree / Disagree: Means Table * Indicates difference is statistically significant at 90% confidence level * * * * * * * 30