Members of America’s career military are starting out the new year with deep concerns over government plans to trim their retirement benefits. The latest results of the First Command Financial Behaviors Index® reveal that 85 percent of middle-class military families who are aware of planned government cuts to military retirement benefits expect to be financially affected by them. Almost half (45 percent) say they expect to be “extremely” or “very” affected by the cuts, which have been making headlines as one of the more controversial provisions of the recent bipartisan budget deal.
Seventy-two percent of December survey respondents reported feeling anxious about sequestration, up 19 points from the previous month. When asked how sequester cuts have been impacting their family, a reduction in retirement benefits was identified by 32 percent – double the 16 percent reported in the previous month.
Other reported impacts of sequestration include:
- Reduced personal expense benefits, such as housing, food and clothes (30 percent),
- Diminished likelihood to be promoted (28 percent) and
- Decreased discretionary income for non-essentials (27 percent).
Many survey respondents are also concerned about a Joint Chiefs of Staffs’ plan to curb the growth of pay and benefits for housing, education and healthcare for servicemembers and retirees. The Index reveals that six out of ten middle-class military families are aware of the plan, and almost 80 percent of them say they feel anxious about the plan and expect to be financially affected by anticipated cuts to defense spending.
Concerns over military budget cuts are reflected in lagging confidence over various financial matters. The Index reveals that just 35 percent of December survey respondents felt extremely or very confident in their ability to retire comfortably, down five points from the previous month and the lowest level in almost a year. Fewer military households also reported feeling:
- Extremely or very financially secure from month to month (down six points to 39 percent),
- Not at all or not very financially stretched month to month (down six points to 43 percent) and
- Extremely or very confident that their financial situation will improve in the next year (down three points to 43 percent).
The top action by military families to deal with sequestration continues to be cutting back on spending, which was reported by 49 percent of December survey respondents. Notably, a growing number of active-duty families are seeking out professional help. The Index reveals that 10 percent of respondents have prepared for sequestration by starting to work with a financial planner. That’s up from four percent in mid-2013.