Military Families Losing Confidence In Ability To Retire Comfortably, First Command Reports
First Command Financial Behaviors Index® reveals men and women in uniform are changing their financial behaviors in light of proposed overhaul of military retirement system
FORT WORTH, Texas – The long-term financial confidence of military families is beginning to unravel, reflecting concerns over the economy and a proposed overhaul of the military retirement system.
Recent survey findings from the First Command Financial Behaviors Index® reveal that just 37 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) are extremely or very confident that their financial situation will improve over the next year, down from 41 percent in the first quarter. And just 34 percent are extremely or very confident in their ability to retire comfortably, down seven percentage points from the first quarter.
“This drop in consumer sentiment is the result of concerns over the economy in general and military retirement benefits in particular,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Two thirds of middle-class military families say they feel nervous about a proposed phase-out the traditional 20-year retirement system. One in five respondents say they are going to start looking into different retirement options. Combined with continuing economic uncertainty, the result is a loss of long-term financial confidence among active-duty personnel and their families.”
Congruent with concerns about the economy and retirement benefits, many military families are changing their financial behaviors for the better. Two out of five servicemembers are moving to more conservative investments, and many families are working harder to pay down debt and cut spending. During the third quarter average monthly debt payments reached a two-year high of $1,103 for short-term debt and $1,371 for long-term debt. And half of military families report cutting back on everyday expenses. A previous Index survey revealed that two-thirds of military families expect to reduce their holiday spending.
At the same time, though, these families are finding it more difficult to save. During the third quarter, survey respondents reported putting an average of $2,630 per month into short-term, long-term and military retirement savings accounts – down more than $200 per month from the first quarter.
“As the government continues to propose new changes to the military retirement system, the First Command Financial Behaviors Index® points to increased concern with their long-term finances and the ability to retire comfortably,” Spiker said. “As a result, military families are changing their behaviors, possibly as a way to prepare for this potential overhaul. As these changes continue to progress, we will be watching closely to see how military families work to cope with and counter these developments.”
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.
Posted: November 29, 2011