First Command News & Media
FOR IMMEDIATE RELEASE — Feb. 29, 2016
First Command Reports: Military Families Concerned Over Shrinking Pay Raises
FORT WORTH, Texas – A third year of sequestration-fueled cuts to annual military pay increases is intensifying the financial worries of America’s career service members.
The latest results of the First Command Financial Behaviors Index® reveal that reductions in annual pay increases rank as the top sequestration concern of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000). Thirty-eight percent of January survey respondents identified reduced raises as one of the ways military budget cuts impact their families. That’s up 12 points from the middle of last year.
This heightened concern follows on the heels of Congress approving a 1.3 percent military pay raise effective Jan. 1. It marks the third consecutive year that the annual military pay raise falls below expected civilian wage growth. Pay raise caps were approved as a way to keep personnel costs in check as part of the budget sequester and defense downsizing.
Basic pay is consistently ranked by career military families as one of their most important benefits. It was ranked No. 1 by 29 percent of survey respondents. Another key military benefit identified by survey respondents was retirement pay, which was picked by 17 percent.
Shrinking pay raises threaten to impact the long-term finances of many military families. Thirty percent of families say they expect to respond by reducing the amount they put into savings and investments.
America’s career service members continue to express concerns over how military budget cuts impact their family finances,” said Scott Spiker, CEO of First Command Financial Services, Inc. “The majority of military families say they are anxious about cuts to defense spending and expect to be financially impacted by them. They continue to respond through a variety of positive financial behaviors, including saving more and spending less. Roughly one in four career military families are turning to financial advisors for help. That’s a smart approach, as our survey results consistently reveal that military families who work with a financial advisor feel more secure with their finances and confident in the future than their do-it-yourself colleagues. Working with a financial advisor is an effective way to respond to the uncertainties of sequestration and defense downsizing.”
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.