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First Command Reports: Service members expect to seek professional advice on new military retirement

First Command Financial Behaviors Index® reveals most career service members want to stick with current system

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FORT WORTH, Texas – Government retirement benefits have become a financial question mark for America’s career service member families, with the majority expecting to seek professional help making the critical decision between opting in to the new military retirement system or sticking with their traditional pension.

The latest results of the First Command Financial Behaviors Index® reveal that 87 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000) say they are likely to consult a financial advisor for help weighing the value of the new cash contributions and other benefits against the certainties of the current guarantees.

“Military retirement is about to get more complicated and less guaranteed,” said Scott Spiker, CEO of First Command Financial Services, Inc. “For the next generation of career service members, long-term financial security will depend on making careful savings and investment decisions at several key junctures of their careers. Perhaps the most important decision is the one facing many of today’s service members, specifically those who qualify to opt in to the new system. It’s no surprise that the majority of career service members expect to consult with a financial advisor on this vital issue.”

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. Seventy-eight percent of survey respondents who say they are likely to serve to full retirement want to be grandfathered into the current retirement system.

“America’s career military families are understandably cautious,” Spiker said. “They know they have to get this decision right. Their lifetime financial security is at stake. While the decision between the two plans doesn’t need to be made until 2018, we are already getting questions from our active-duty clients. This aligns with our survey results, which show that 60 percent of service members who are already working with a financial advisor say they are extremely or very likely to ask their advisor for help with this decision.”

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.


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