First Command Reports: Military Families Shun Stocks in Retirement Savings Accounts

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The First Command Financial Behaviors Index® reveals that low-yield G
fund is the No. 1 investment option of middle-class military families
who participate in the federal government’s Thrift Savings Plan

FORT WORTH, Texas–(BUSINESS WIRE)–Many career military families who invest in the federal government’s
Thrift Savings Plan are avoiding the stock market by stashing their
retirement dollars in a low-risk, low-yield government securities fund.

The First Command Financial Behaviors Index® reveals that the G Fund is
the most popular investment choice 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). November survey results reveal
that 36 percent of TSP investors are participating in this government
securities fund, which offers protection from loss of principal but
delivers returns that may be below the rate of inflation. That’s up
eight points from the previous year.

“Steering away from stocks and towards the so-called safe investment
option of the G Fund is by no means the safest choice, especially for
long-term investors,” said Scott Spiker, CEO of First Command Financial
Services, Inc. “While the G Fund may feel like a sanctuary from
potential stock market losses in the near term, it may not grow enough
over time for service member families to meet their future needs.”

Past market losses have had a strong influence on many TSP participants.
In June, for instance, a roiling market prompted enrollees
to move $1.8 billion out of equity funds and into the G Fund
.

“If someone did that and stayed in the G Fund, they would have missed
the market growth that we experienced in July,” said Kim
Weaver
of the Federal Retirement Thrift Investment Board, which
manages the TSP.

November survey results reveal that other commonly held TSP funds
include:

  • C Fund (Common Stock Index Fund) – 33 percent
  • S Fund (Small Capitalization Stock Index Fund) – 29 percent
  • F Fund (Fixed Income Index fund) – 27 percent

Interest in the lifecycle funds remains relatively low, ranging from 6
percent to 22 percent.

Half of survey respondents say they are enrolled in the TSP. Notably,
service members who work with a financial advisor are more likely to
participate in the program. The Index reveals that 54 percent of career
military families with a financial advisor participate in the TSP.
That’s 22 points higher than the 32 percent participation rate for
families without an advisor.

“These findings reinforce the value of professional coaching in saving
for retirement,” Spiker said. “Financial advisors appear to be
reinforcing and encouraging participation in the TSP, which is a
noteworthy finding as they have no direct financial incentive to
encourage this higher level of participation in TSP. We see the results
of this commitment in our own company, where 68 percent of active-duty
clients are participating in TSP. This compares to government data
showing an overall 42 percent participation rate.”

A commitment to saving for retirement is particularly important today as
lawmakers are changing the traditional military pension to a blended
program that includes government matching contributions to TSP accounts.

“The New Military Retirement features a 20 percent reduction in the
traditional lifetime pension, which makes saving for retirement through
the TSP and other tools even more critical for our men and women in
uniform and their families,” Spiker said. “We are confident that
financial advisors will play a key role in helping service member
families make the most of the TSP as they negotiate the new retirement
landscape.”

About the First Command Financial Behaviors Index®

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. http://www.firstcommand.com/fbi/

About Sentient Decision Science, Inc.

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.

About First Command

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.

First Command Financial Services, Inc., is the parent of First
Command Financial Planning, Inc. (Member
SIPC,
FINRA),
First Command Advisory Services, Inc., 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. , a broker-dealer. Financial planning and investment
advisory services are offered by First Command Advisory Services, Inc.,
an investment adviser.
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. In certain states, as required by law, First Command Insurance
Services, Inc. does business as a separate domestic corporation.
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. First Command Financial Services,
Inc. and its related entities are not affiliated with, authorized to
sell or represent on behalf of or otherwise endorsed by any federal
employee benefits programs referenced, by the U.S. government, or the
U.S. armed forces.

Contacts

First Command Financial Services, Inc.
Mark Leach, 817-569-2419
Media
Relations
msleach@firstcommand.com