First Command News & Media
FOR IMMEDIATE RELEASE — March. 14, 2017
First Command Reports: Career military families saving more for retirement
The First Command Financial Behaviors Index® reveals fourth–quarter upturn in retirement savings by middle–class service members who work with a financial advisor.
FORT WORTH, Texas – America's career military families who work with a financial advisor focused on building up their retirement accounts during the fourth quarter of 2016, paving the way to start another year of continued saving–centric behaviors.
The First Command Financial Behaviors Index® reveals that 82 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) who work with a financial advisor contributed to retirement savings during the fourth quarter. That compares to 69 percent of their do–it–yourself colleagues.
Families with financial advisors contributed more dollars to their retirement accounts, too. Monthly median contributions for the two groups were $500 and $250, respectively.
Retirement concerns are top of mind for many career military families, particularly in light of the new Blended Retirement System. About half of career military families have viewed online training to explain the new retirement system options, and roughly two in three are aware of educational classes that will be available in 2017. Most military families indicate they are likely to consult a financial advisor regarding their retirement system options – particularly those who already work with an advisor (65 percent are extremely or very likely to consult their advisor versus 25 percent without an advisor).
Service members who work with a financial advisor were also more likely than those without an advisor to contribute to:
- Short-term savings (82 percent versus 74 percent). Monthly median contributions for the two groups were $500 and $250.
- Long-term savings (65 percent versus 41 percent). Monthly median contributions for the two groups were $400 and $300.
Those with a financial advisor reported roughly $35,000 more in accumulated savings and retirement funds than their do–it–yourself colleagues. Current holdings for the two groups were $137,665 and $102,398, respectively.
The majority of career military families also focused on paying down debt during the fourth quarter. The Index reveals that 75 percent contributed to short–term debt (making median payments of $500) and 73 percent contributed to long–term debt (with median payments of $850). Those who work with a financial advisor reported almost $66,000 less in debt than their do–it–yourself counterparts. Current debt levels for the two groups were $59,801 and $125,772.
The savings and debt reduction efforts of military families who work with a financial advisor helped push the overall Index score for the fourth quarter to 145 – the highest score in more than a year. (The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.)
Look for the savings and debt reduction trend to continue in the months ahead. The Index reveals that 44 percent of military families who work with a financial advisor say they plan to increase their savings in the future. Thirty five percent expect to increase debt payments. In contrast, roughly one in four of those who do not work with a financial advisor say they intend to take these actions.
“These results underscore the significant contributions that financial professionals can make in coaching service members to focus on positive money habits today so they can feel more certain and sure about tomorrow,” said Scott Spiker, chairman/CEO of First Command Financial Services, Inc. “Roughly two thirds of those with an advisor feel extremely or very confident that their financial situation will improve in the next year and in their ability to retire comfortably. Financial advisors are helping their career military clients understand their options under the new Blended Retirement System and take the kinds of positive actions that will help them feel more confident in the long-term pursuit of financial security.”
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.