The economy is taking a toll on the fiscal optimism of our men and women in uniform.
Recent survey findings of the First Command Financial Behaviors Index® reveal that many 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 cutting spending, increasing savings – and moving to more conservative investments.
Almost one in five survey respondents who participate in the federal government’s Thrift Savings Plan (TSP) say they have moved to a more conservative fund allocation as a result of various economic factors, including a recent Pentagon-sponsored proposal to overhaul the military retirement system.
The Thrift Savings Plan is one of the major long-term savings vehicles employed by active-duty military families and federal employees. This tax-advantaged, defined-contribution retirement savings plan is in many ways the government equivalent of corporate 401(k) plans.
The most popular TSP funds listed by the survey respondents include:
Almost half of TSP participants said they are enrolled in the G Fund, which is invested in U.S. Treasury securities and is considered one of the lower-risk investment options in the program. The TSP website indicates that participants should “consider investing in the G Fund if you would like to have all or a portion of your TSP account completely protected from loss.”
The increased focus on more conservative investment options is a significant development among active-duty families, said Scott Spiker, CEO of First Command.
“While reallocating to more conservative funds could protect TSP investors against short-term losses, it also has the potential to impact future growth,” he said. “We recommend that military consumers consult with a financial planner or other professional to determine fund allocations that are right for their personal risk tolerance and long-term goals.”
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. 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 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. First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), First Command Insurance Services, Inc. and First Command Bank. Financial planning services and investment products, including securities, are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Insurance Services, Inc. in all states except Montana, where as required by law, insurance products and services are offered by First Command Financial Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met. In Europe, investment and insurance products and services are offered through First Command Europe Limited. First Command Europe Limited is a wholly owned subsidiary of First Command Financial Services, Inc. and is authorised and regulated by the Financial Services Authority. Certain products and services offered in the United States may not be available through First Command Europe Limited.