Middle-class career military members are cutting back on expenses and fearing for their retirement because of proposals to cut military pay and curb benefits, according to First Command’s Financial Behaviors Index.
Eighty-five percent of the 530 families surveyed say they will be financially affected by planned cuts in military retirement pay and 45 percent say they will be “extremely” or “very” affected, the survey says. Included in the survey are senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000.
“Service members are feeling increasingly nervous about the impact of defense downsizing on their financial and professional lives, and retirement benefits are their top concern,” says Scott Spiker, CEO of First Command Financial Services Inc.
Reduced retirement benefits were the top concern for 32 percent, double the number from the previous year, followed by concern about reduced personal expense benefits and a decreased likelihood of being promoted.
Concerns over military budget cuts are reflected in a lagging confidence over various financial matters. The index shows only 35 percent feel extremely or very confident in their ability to retire comfortably, a 5-point decrease from November and the lowest level in almost a year.
The first action to be taken by the respondents is to cut back on spending, which was reported by 49 percent of December survey respondents. Also 10 percent are now working with a financial advisor, up from 4 percent in the middle of 2013.
Respondents are also worried about their job security. In December, 37 percent said they were concerned about job security, compared with 25 percent who expressed that worry in mid-2013.
“Over the past several months, our men and women in uniform have become increasingly uneasy about the career viability of the military,” says Spiker. “They are now asking tough questions about their futures like, ‘Do I want to stay in and make this a career?’ or ‘Do I even have the option anymore to make this a career?’ Sequestration has placed the problems of our federal budget squarely on the military.”