First Command News & Media
FOR IMMEDIATE RELEASE — Nov. 8, 2016
First Command launches analyzer tool for military families considering new retirement system
First Command Financial Behaviors Index® reveals that middle-class service members who work with a financial advisor are twice as likely as their do-it-yourself counterparts to feel their finances will improve over the next year.
FORT WORTH, Texas – Amid growing demand for professional advice on the government’s new military retirement system, First Command Financial Services, Inc. is rolling out a new planning tool designed to help current active-duty families decide between opting in to the new, blended retirement plan and sticking with their traditional pension.
Called The New Military Retirement Analyzer, this proprietary tool is designed for First Command Financial Advisors to show career service members how anticipated benefits under the new system compare to the current pension program. The analysis is intended to give military members unique insights into their own family finances so they can make informed decisions about their retirement planning.
“The new military retirement system has made long-term financial planning a lot more complicated and less guaranteed,” said Scott Spiker, CEO of First Command. “The Analyzer is intended to help America’s career military families weigh the value of the cash contributions and other benefits of the new plan against the certainties and guarantees of the traditional military pension. While the decision between the two plans doesn’t need to be made until 2018, our active-duty clients are already asking questions and coming to our Advisors for answers. They know they have to get this decision right. Their lifetime financial security is at stake.”
The new system, which goes into effect on Jan. 1, 2018, calls for a 20 percent reduction in current retirement pay in exchange for a defined contribution program of automatic and matching Thrift Savings Plan contributions, a mid-career continuation pay bonus and options to receive a portion of retirement as a lump sum. Proponents say the new structure will offer greater financial flexibility and pave the way for a higher percentage of service members to leave the military with at least some retirement savings. But among current service members, the argument in favor of lifetime financial security is making the traditional pension the preferred option. Recent results of the First Command Financial Behaviors Index® reveal four out of five middle-class military families (commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000) who say they are likely to serve to full retirement want to be grandfathered into the current retirement system.
“Defined contribution plans generally have not worked better for middle-class Americans in building a suitable income for retirement,” Spiker said. “There is no reason to believe they will work better for our middle-class military force either. While every family situation is different, we anticipate that in most cases military families will want to stick with the traditional pension. The results of the Analyzer will typically reinforce this decision.”
The Index reveals that 87 percent of career military families say they are likely to consult a financial advisor for help with the opt-in decision. But for career service members who are still on the fence about seeking professional help, First Command is illustrating the value of knowledgeable advice through a simplified version of the Analyzer. Called the New Military Retirement Preview, this mobile app is intended to give service members and their families a quick demonstration of the type of comparative analysis that First Command Financial Advisors can provide through the more powerful Analyzer tool. The Preview app is offered directly through First Command Financial Advisors.
About 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. Financial Behaviors Index
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.