First Command News & Events

FOR IMMEDIATE RELEASE - June 25, 2013

Military Families Intensifying Financial Preparations For Sequestration, First Command Reports

First Command Financial Behaviors Index® reveals growing frugality among middle-class servicemembers

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FORT WORTH, Texas — A growing number of middle-class military families are responding to the across-the-board spending cuts known as sequestration by making positive changes to their own finances.

Recent survey findings from the First Command Financial Behaviors Index® reveals that middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) have been intensifying their efforts to spend less and save more. The percentage of survey respondents who say they have been preparing for sequestration by cutting back on everyday spending has been on the rise in 2013, growing from 39 percent in January to 54 percent in April. Also, they have been increasing their savings, from 30 percent in January to 36 percent in April.

Other ways military families have been responding to sequestration cuts include:

  • Decreasing the aggressiveness of investments (11 percent)
  • Moving investments to cash (7 percent)
  • Starting work with a financial planner (6 percent)

Just 33 percent of military families indicate that they are not doing anything to prepare for sequestration, down 5 points from the beginning of the year.

On the other hand, general population households are making far fewer changes in response to sequestration. The Index reveals that 62 percent indicate that they are not doing anything to prepare for sequestration. Just 29 percent have cut spending and 15 percent have increased savings.

“While all Americans are concerned about sequestration, the impact on defense spending makes it a very personal issue for servicemembers,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Our survey reveals that roughly three out of five military respondents are feeling anxious about sequestration. In contrast, just 36 percent of general population families report feeling anxious. Our career servicemembers are understandably worried that defense downsizing will negatively impact their families, and they are responding with the types of frugal behaviors that can bring meaningful changes to their finances.”

Military families anticipate sequestration will mean:

  • Increased responsibility for healthcare costs (35 percent)
  • Reduced retirement benefits (34 percent)
  • Reduced education benefits (33 percent)
  • Decreased discretionary income for non-essentials (31 percent)
  • Reduced personal expense benefits, such as housing, clothing and food (30 percent)
  • Despite these concerns, middle-class military families are experiencing increased financial optimism. They are significantly more likely than other Americans to feel extremely or very:

    • Confident in their ability to retire comfortably (38 percent of military families versus 25 percent of the general population)
    • Financially secure month to month (43 percent versus 33 percent)

    Financial optimism is highest of all among servicemembers who work with a financial planner. The Index reveals that 51 percent of military families who work with a financial planner feel extremely or very confident in their ability to retire comfortably and extremely or very financially secure month to month. (Among those without a planner, these numbers drop to 27 percent and 35 percent , respectively.)

    Additionally, military households with a financial planner are more likely to feel extremely or very confident that their financial situation will improve next year (52 percent versus 31 percent).

    “These results support our longer-term research findings and professional experience serving career military families that working with a financial advisor helps increase feelings of financial optimism and confidence,” Spiker said. “As our men and women in uniform continue to take positive steps to get squared away in their financial lives during this uncertain time, we expect to see increasing demand for financial coaching from knowledgeable financial professionals.”

    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.

    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.

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