America’s career military is growing increasingly anxious about how defense downsizing and sequestration will impact their near-term job security.
The First Command Financial Behaviors Index, which assesses trends among U.S. military service members and the general population, reveals that almost half (46 percent) of middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) are concerned about their job security in the coming months. That’s the highest level of concern recorded since the question was added to the monthly survey in spring 2013.
“Our nation’s ongoing military budget woes, defense downsizing, and sequestration are at the center of these mounting career worries,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Almost seven-in-ten survey respondents indicate anxiety regarding sequestration and almost half expect to be extremely or very affected by anticipated cuts to defense spending.”
The surge in job security concerns also shows up when survey respondents identify the various ways that sequestration is impacting their households. In the May survey, 32 percent of military families said they were less likely to be promoted. That’s up 17 points from the previous month. And 24 percent of military families said they were impacted by an increased likelihood to experience early separation or not serve to full retirement — up nine points.
Other impacts of sequestration reported by servicemembers and their families are also on the rise, including:
Reduction in annual pay increases (43 percent, up seven points)
Reduction in housing, clothing, food and other personal expense benefits (34 percent, up 13 points to a year-to-date high)
Reduction in education benefits (30 percent, up 18 points to a year-to-date high)
Reduction in retirement benefits (29 percent, up nine points)
Increased responsibility for health care costs (29 percent, up 14 points to a year-to-date high)
Decrease in discretionary income for non-essentials (26 percent, up 13 points to a year-to-date high)
BRAC (Base Realignment and Closure Commission) will force relocation (17 percent, up nine points to a year-to-date high)
A growing number of military families are dealing with their sequestration-related concerns through an intensified focus on frugal living. When asked how they are preparing for sequester cuts, survey respondents indicated they are:
Cutting back on everyday spending (49 percent, up five points)
Increasing the amount they are saving (44 percent, up nine points)
Decreasing the aggressiveness of their investments (24 percent, up 12 points to the highest level recorded since the question was added to the monthly survey in fall 2012)
Moving investments to cash (22 percent, up 13 points to a record high)
Notably, their preparations increasingly involve seeking out professional financial assistance. ‘Starting to work with a financial advisor’ was identified by 15 percent of May survey respondents, up from 3 percent January’s a record high.
“Many service members and their spouses are experiencing great career anxiety that is prompting a variety of proactive behaviors, including a growing interest in seeking out professional help with personal finances,” Spiker said. “Financial advisors are ideally positioned to amplify fiscal discipline in a population that is growing ever more concerned about their military pay, benefits and career viability. Over the coming months, we expect to see even more military families seek out trusted professionals to help them get their household finances squared away.”
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. www.firstcommand.com/research.