Economic worries are dissipating, sequestration concerns are on the rise and members of America’s career military are feeling the mixed emotions of both as they simultaneously become more confident in their immediate finances and more anxious about their careers and future.
The latest results of the First Command Financial Behaviors Index® reveal that roughly half 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 feeling confident on several issues related to near-term finances. Survey data collected in late February shows they are feeling:
- Not at all or not very financially stretched month to month (58 percent, up three points from January)
- Extremely or very financially secure month to month (52 percent, up six points).
- Extremely or very confident that their financial situation will improve in the next year (50 percent, up five points).
These are the highest percentages recorded – and the first time all three measurements were at or above the 50 percent mark – since the Index began collecting responses on these topics in 2011.
But confidence is slipping on longer-term issues. When survey respondents were asked to gauge their confidence in the ability to retire comfortably, just 38 percent said they feel extremely or very confident. That’s down six points. And military families are feeling the impact of sequestration on a number of compensation issues, with reduced retirement benefits easily emerging as their top concern. It was cited by 38 percent of survey respondents in January and February compared to just 15 percent in October.
Career worries are also growing. Servicemembers expressed concerns on several sequestration-related issues, including:
- Likelihood of not being promoted (33 percent, up seven points from January).
- Early separation or not serving to full retirement (26 percent, up seven points).
- Job security (32 percent, up six points).
“Military families have reached an unexpected turn in the financial road,” said Scott Spiker, CEO of First Command Financial Services, Inc. “After years of pursuing a set of sound financial behaviors in response to the economic downturn, they are feeling more confident in their finances. They can see the positive results of their frugality in bigger savings balances and smaller consumer debt loads. And of course they are feeling more confident thanks to the improving outlook for unemployment and the economy. But now these good feelings are being challenged by growing concerns over how military budget cuts, sequestration and defense downsizing will impact their family finances. Our men and women in uniform are coming to grips with the eventuality that their promotion rate and ability to retire are diminished. They are very apprehensive that they may not make it to the 20-year military retirement. For America’s career military, sequestration is becoming the new recession. By continuing to focus on saving more and spending less, middle-class military families can arm themselves both financially and emotionally for the changes ahead and feel more secure about their future.”
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.