FORT WORTH, Texas--(BUSINESS WIRE)--Members of America’s career military are starting out the new year with deep concerns over government plans to trim their retirement benefits.
The latest results of the First Command Financial Behaviors Index® reveal that 85 percent of middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) who are aware of planned government cuts to military retirement benefits expect to be financially affected by them. Almost half (45 percent) say they expect to be “extremely” or “very” affected by the cuts, which have been making headlines as one of the more controversial provisions of the recent bipartisan budget deal.
“Servicemembers are feeling increasingly nervous about the impact of defense downsizing on their financial and professional lives, and retirement benefits are their top concern,” said Scott Spiker, CEO of First Command Financial Services, Inc. “The Index reveals that 72 percent of December survey respondents reported feeling anxious about sequestration, up 19 points from the previous month. When asked how sequester cuts have been impacting their family, a reduction in retirement benefits was identified by 32 percent – double the 16 percent reported in the previous month.”
Other reported impacts of sequestration include:
- Reduced personal expense benefits, such as housing, food and clothes (30 percent),
- Diminished likelihood to be promoted (28 percent) and
- Decreased discretionary income for non-essentials (27 percent).
Many survey respondents are also concerned about a Joint Chiefs of Staffs’ plan to curb the growth of pay and benefits for housing, education and healthcare for servicemembers and retirees. The Index reveals that six out of ten middle-class military families are aware of the plan, and almost 80 percent of them say they feel anxious about the plan and expect to be financially affected by anticipated cuts to defense spending.
Concerns over military budget cuts are reflected in lagging confidence over various financial matters. The Index reveals that just 35 percent of December survey respondents felt extremely or very confident in their ability to retire comfortably, down five points from the previous month and the lowest level in almost a year. Fewer military households also reported feeling:
- Extremely or very financially secure from month to month (down six points to 39 percent),
- Not at all or not very financially stretched month to month (down six points to 43 percent) and
- Extremely or very confident that their financial situation will improve in the next year (down three points to 43 percent).
The top action by military families to deal with sequestration continues to be cutting back on spending, which was reported by 49 percent of December survey respondents. Notably, a growing number of active-duty families are seeking out professional help. The Index reveals that 10 percent of respondents have prepared for sequestration by starting to work with a financial planner. That’s up from four percent in mid-2013.
“Financial planners are having a positive impact on feelings of financial security and confidence,” Spiker said. “The Index shows that 49 percent of military families who work with a financial advisor feel confident in their ability to retire comfortably. That compares to just 25 percent of those who take a do-it-yourself approach. By coaching their clients to spend less, save more and adopt other positive behaviors, knowledgeable financial professionals are bringing a sense of security to our men and women in uniform.”
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.