Many military families are dealing with their sequestration-related concerns through an intensified focus on frugal living.

Near-term career concerns appear to be easing in America’s career military families, where worries over defense downsizing have been a persistent drag on feelings of job security, according to First Command Financial Services.

March results of the First Command Financial Behaviors Index reveal that 43 percent of middle-class military families (senior NCOs and commissioned officers in pay grades E-5 and above with household incomes of at least $50,000) are concerned about their job security in the coming months. That’s down from a record high of 59 percent in September 2015. The first-quarter average was 47 percent, down slightly from 52 percent for the fourth quarter and 54 percent for 2015. 

“This recent drop in job security concerns may be driven in part by news reports about members of Congress calling for the Army to add personnel, reversing the cuts of recent years,” said Scott Spiker, CEO of First Command Financial Services, Inc. “While the downtick is welcome news, it may not last as critics of the proposal have already noted that lawmakers have yet to permanently resolve the deep across-the-board cuts to defense and other federal spending called sequestration.

Notably, we’ve not seen a downturn in sequestration worries. Seven in ten survey respondents report anxiety about cuts to defense spending and three quarters expect to be financially affected by them. We’ll continue to watch these key measures closely in the months ahead.”

Broader career-related concerns continue to show up when survey respondents identify the various ways that sequestration may impact their households. In the March survey, 25 percent of military families said they were less likely to be promoted. And 25 percent of military families pointed to an increased likelihood to experience early separation or not serve to full retirement.

Other impacts of sequestration reported by career service members and their families include:

  • Reduction in annual pay increases (40 percent)

  • Reduction in retirement benefits (37 percent)

  • Increased responsibility for healthcare costs (34 percent)

  • Reduction in basic allowance for housing (29 percent)

  • Reduction in education benefits (26 percent)

  • Reduction in housing, clothing, food and other personal expense benefits (22 percent)

  • Decrease in discretionary income for non-essentials (21 percent)

  • BRAC (base realignment and closure commission) will force relocation (21 percent)

Many military families are dealing with their sequestration-related concerns through an intensified focus on frugal living. When asked how they are handling sequester cuts, survey respondents indicated they are:

  • Increasing the amount they are saving (49 percent)

  • Cutting back on everyday spending (42 percent)

  • Decreasing the aggressiveness of their investments (21 percent)

  • Starting to work with a financial advisor (20 percent)

 “Working with a financial advisor is an ideal way to deal with the fiscal uncertainties of defense downsizing and sequestration,” Spiker said. “Advisors can help service member families develop strong financial behaviors to address concerns involving 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.”   

 

See also:

Best and worst states for military retirees [infographic]

Veterans hide war injuries from companies in civilian jobs

Military families’ top New Year’s resolution: cutting debt