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Sequestration Concerns Ease In Military Families, First Command Reports

First Command Financial Behaviors Index® reveals drop in anxiety among middle-class servicemembers

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FORT WORTH, Texas — Anxiety over sequestration and how it will affect their financial lives is easing among servicemembers and their families, according to the latest survey results from the First Command Financial Behaviors Index®.

The Index reveals that 49 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) said they were anxious about sequestration in May, down 10 points from April. Expectations of how sequestration will impact their lives has shifted significantly, too. During the past six months, military families have become less likely to believe that the federal budget cuts will mean:

  • Decreased discretionary income for non-essentials (24 percent in May, down from 40 percent in November)
  • A forced relocation due to base closure and realignment (20 percent, down from 47 percent)
  • An early separation that prevents serving to full retirement (19 percent, down from 50 percent)

While these findings represent a promising development for military families, the monthly Index surveys continue to reveal that many people remain concerned about the across-the-board spending cuts known as sequestration, said Scott Spiker, CEO of First Command Financial Services, Inc.

“The April and May surveys reveal that almost one in fiveservicemembers and their families report feeling extremely or very anxious,” Spiker said. “Clearly our men and women in uniform continue to worry that the sequester cuts will negatively affect their families.”

Since the fall, military families have grown more likely to expect sequestration will mean:

  • Increased responsibility for healthcare costs (37 percent in May, up from 21 percent in November)
  • Reduced retirement benefits (36 percent, up from 28 percent)
  • Reduced personal expense benefits, such as housing, clothing and food (35 percent, up from 28 percent)

Servicemembers have been responding to their sequestration fears with an increasing commitment to frugal living. The Index reveals that cutting back on everyday spending has been on the rise in 2013, growing from roughly two out of five military families in January to more than half in April and May.

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

  • Saving more (26 percent)
  • Decreasing the aggressiveness of investments (12 percent)
  • Moving investments to cash (6 percent)
  • Starting work with a financial planner (6 percent)

&8220;Working with a knowledgeable financial professional is a particularly effective way to deal with feelings of anxiety,” Spiker said. &8220;Our research and experience has consistently revealed that military families who work with a financial advisor are more likely to feel extremely or very confident in their ability to retire comfortably than those who take a do-it-yourself approach to financial planning. They are also less likely to feel financially stretched month to month. We expect to see increasing demand for financial coaching as our men and women in uniform continue to take positive steps to get squared away in their financial lives during this uncertain time.”

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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