Military families are losing confidence in their ability to retire comfortably, according to the First Command Financial Behaviors Index.
The survey found that just 37 percent of middle-class military families, those with household incomes of at least $50,000, are extremely or very confident that their financial situation will improve over the next year, down from 41 percent in the first quarter. Only 34 percent are extremely or very confident they will be able to retire comfortably, down seven percentage points from the first quarter.
“This drop in consumer sentiment is the result of concerns over the economy in general and military retirement benefits in particular,” said Scott Spiker, CEO of First Command Financial Services Inc. “Two-thirds of middle class military families say they feel nervous about a proposed phase-out of the traditional 20-year retirement system. One in five respondents say they are going to start looking into different retirement options. Combined with continuing economic uncertainty, the result is a loss of long-term financial confidence among active-duty personnel and their families.”
Many military families are changing their financial behaviors. According to the survey, two out of five service members are moving to more conservative investments and many families are working harder to pay down debt and cut spending. About half of military families reported cutting back on everyday expenses.
“As the government continues to propose new changes to the military retirement system, the First Command Financial Behaviors Index points to increased concern with their long-term finances and the ability to retire comfortably,” Spiker said. “As a result, military families are changing their behaviors, possibly as a way to prepare for this potential overhaul. As these changes continue to progress, we will be watching closely to see how military families work to cope with and counter these developments.”
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 about 530 U.S. consumers ages 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly.
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.