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Servicemembers Struggling To Save In Face Of Defense Downsizing, First Command Reports

First Command Financial Behaviors Index® reveals more military families are committing to frugal behaviors, but they are putting away fewer dollars

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FORT WORTH, Texas — Despite a growing commitment to prepare for defense downsizing through frugal living, middle-class military families are finding it harder to sock away dollars for the future.

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) put away an average of $2,609 per month into savings and retirement accounts during the first quarter, down 20 percent from the end of 2012 and 33 percent from the third quarter of 2012. The first-quarter decline in savings behaviors contributed to a dramatic drop in the Index, which fell 11 points to a record-low score of 101.

At the same time, though, many military families have been intensifying their commitment to belt-tightening strategies. In February almost half (46 percent) said they were preparing for sequestration by cutting back on everyday spending, up 7 points from January. And 37 percent of respondents said their sequester preparations included increasing savings, up 7 points from January.

“Many military families have been responding to sequestration by making a real commitment to shore up their budgets and embrace frugal living, but it hasn’t been enough to offset an overall decline in savings among middle-class servicemembers,” said Scott Spiker, CEO of First Command Financial Services, Inc. “They are facing the challenge of finding enough dollars in their budget to make good on that commitment.”

The military families who are achieving the greatest savings successes are those who have the support of a financial planner. During the first quarter these families contributed more than those without a planner to:

  • Short-term savings ($962 versus $664 without a planner)
  • Long-term savings ($909 versus $293)
  • Retirement ($1,434 versus $1,129)

Notably, military families with a financial planner tend to carry lower debt loads and therefore are putting fewer dollars toward debt reduction. During the first quarter, they contributed less than those without a planner to paying down short-term debt ($998 versus $1,151 without a planner).

“Looking ahead, the Index reveals that most servicemembers do not foresee a change in their savings behaviors in coming months regardless of whether or not they have a financial planner,” Spiker said. “This suggests those with a financial planner will continue to save more. And they will feel more financially secure and more confident in their ability to retire comfortably than those who choose to go it alone without the help of a trusted financial professional.”

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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