First Command Reports: Career Military Families Focusing on Retirement Savings

Investment Weekly News

By a News Reporter-Staff News Editor at Investment Weekly News -- The majority of America's career military families who work with a financial advisor are staying focused on retirement savings in 2017, according to the latest results of the First Command Financial Behaviors Index®.

Ninety six percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000) who work with a financial advisor contributed to retirement savings during the first quarter. In contrast, just 74 percent of their do-it-yourself colleagues contributed to retirement accounts.

Families with financial advisors contributed more dollars to their retirement accounts than those without an advisor. Monthly mean contributions for the two groups were $507 and $301, respectively.

"The military's new Blended Retirement System is keeping retirement planning at the top of financial concerns for many career military families," said Scott Spiker, chairman/CEO of First Command Financial Services, Inc. "Most military families indicate they are likely to consult a financial advisor regarding their retirement system options, particularly those who already work with an advisor. Sixty-five percent of military families who work with an advisor say they are extremely or very likely to consult their advisor for help making retirement system choices versus 24 percent of those without an advisor."

The Blended Retirement System features a 20 percent reduction in current guaranteed retirement pay generated by the old traditional pension in exchange for a variety of new benefits that include automatic and matching Thrift Savings Plan contributions, a mid-career continuation pay bonus and options to receive a portion of the reduced pension as a lump sum. Service members who enter the military on or after Jan. 1, 2018, will be automatically enrolled in the new system. The new plan is also available to many current service members, specifically those who will have less than 12 years of service as of Dec. 31, 2017. They can choose to either stay with the old retirement system or opt in to the new one.