FORT WORTH, Texas – Despite ongoing concerns related to sequestration and defense budget cuts, America’s career military is growing more confident in their overall family finances.
The First Command Financial Behaviors Index® reveals that several key measures of confidence have improved over the past six months. Third-quarter results show that more than half 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) believe that their financial situation will improve in the next year (up 6 points to 54 percent). Career military families are also growing more confident in their ability to retire comfortably (up 11 points to 50 percent) and less likely to feel financially stretched month to month (down 17 points to 39 percent).
These upticks in confidence helped propel the Index’s attitudes sub-index ahead 8 points to 136 and push the overall Index score to a record-high of 132 for the third quarter. The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.
While overall financial confidence is growing, military families continue to worry about sequestration. September survey results reveal that 76 percent of military respondents feel anxious about cuts to defense spending. That’s up 14 points from the end of the first quarter. In contrast, concern remains muted in the general population with about two out of five civilian respondents expressing anxiety.
Roughly four out of five military families expect to be financially impacted by sequestration, and they are continuing to take action through a variety of positive behaviors. Half of September survey respondents say they are increasing the amount they are saving.
Monthly savings rates are being positively impacted by the support of a financial advisor. During the third quarter, military families working with a financial advisor were considerably more likely to save – and put away more dollars – than their do-it-yourself counterparts. Their monthly savings rates are:
- 91 percent for short-term savings. This compares to 68 percent for those without an advisor. Monthly median contributions for savers in the two groups are $500 and $490, respectively.
- 84 percent for retirement savings. This compares to 66 percent for those without an advisor. Monthly median contributions for savers in the two groups are $458 and $350, respectively.
- 79 percent for long-term savings. This compares to 34 percent for those without an advisor. Monthly median contributions for savers in the two groups are$499 and $250, respectively.
Looking ahead, most military members expect to continue their savings behaviors in the coming months. However, servicemembers with a financial advisor are more likely than those without to anticipate increasing their monthly savings amounts (39 percent versus 28 percent).
“As military families navigate the uncertainties of sequestration and defense downsizing, they are taking actions that help them feel more optimistic about their financial security,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Saving money gives families a greater sense of control over their finances, which we see reflected in growing feelings of confidence. Those who work with a financial advisor are saving more and that is helping them gain a particularly positive outlook in this period of financial and career uncertainty. Notably, servicemembers are seeking out professional help in greater numbers. The Index reveals that 15 percent of military families say they are starting to work with a financial advisor as a result of sequestration. That’s up from just 4 percent at the end of the first quarter. We are optimistic this trend will continue so even more military families start addressing their long-term financial security.”
About the 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. www.firstcommand.com/research