Building off the 2018 Financial Wellness Census, a new Prudential survey explores how an unanticipated income interruption affected financial health and points to the value of emergency savings.
Researchers have warned for years that many Americans lack the emergency savings to cover even a relatively brief disruption of their income. Few events have provided a clearer real-world test of that assessment than the recent 35-day partial government shutdown.
To learn more about the shutdown’s effect on the financial health of federal workers and their households, and to assist employers and policymakers as they consider ways to help Americans solve the financial challenges of our changing world, Prudential Financial surveyed more than 350 federal employees and contractors who went unpaid during the shutdown. The findings supplement the results of Prudential’s 2018 Financial Wellness Census, which found the country almost equally split between those who are financially healthy and those who are struggling to meet current living expenses and save long-term goals.
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Despite federal workers having a higher rate of emergency savings than American workers as a whole, the research found:
• Nearly half the survey respondents fell behind on their bills during the shutdown. More than a quarter missed a mortgage or rent payment.
• Nearly a quarter cut back or eliminated spending on health or medical expense for themselves or family members.
• More than 80 percent said their overall stress levels spiked, with half reporting they became “much more stressed.”
• In a majority of cases, federal workers burned through most or all of their emergency savings.
While the survey spotlights the impact of the government shutdown—an unprecedented event—on a segment of the U.S. workforce, a disruption in income for the average American could be the result of something far more common, such as a job loss, an injury, a physical or mental health issue or even a pregnancy.
An estimated 51 million working adults in the U.S. are without disability insurance other than the basic coverage available through Social Security, which does not cover most challenges workers are likely to face; and 63 percent of Americans can’t handle a $500 emergency.
“The recent government shutdown is a wake-up call for Americans and proves how vulnerable people are to income volatility,” said Jamie Kalamarides, president of Prudential Group Insurance. “Our survey puts a spotlight on both the need for emergency savings and forms of insurance available at the workplace, like disability insurance, which can help Americans protect their income when unexpected events arise.”
Click here to download and read the full report, “Financial Fragility PDF opens in a new window .”
About the Prudential Financial Wellness Census
The original Financial Wellness CensusTM was conducted by Prudential’s Decision Insights Group and Chadwick Martin Bailey within the United States between Sept. 20 and Oct. 9, 2017, among a nationally representative sample of 3,013 U.S. adults ages 25-70. For the complete survey methodology, including weighting variables and subgroup sample sizes, please contact firstname.lastname@example.org.