Inflation is top-of-mind for most Americans, as a majority say that they have reduced household spending in many areas except when it comes to retirement savings and life insurance. A new USAA Life Insurance Company survey explored how American civilian and military-connected families are faring in today's economy and the financial decisions they are making as a result. While 55% of civilian and 56% of military-connected families—those who have family members serving or have served in the military—said they have already made spending cuts, less than 20% of both groups report having made reductions in their life insurance expenses.

The areas most affected by household spending cuts are discretionary spending and vacation planning. In fact, consumers were almost twice as likely to reduce spending in these areas over retirement plan contributions, cybersecurity protections, and life insurance.

"This year's study shows that, as expected, consumers are adjusting their household spending due to the economy and inflation," said Brandon Carter, president of USAA Life Insurance Company. "However, this hasn't affected spending on critical, long-term financial products like retirement savings, investments and life insurance."

Additional findings in this second annual survey show a stark contrast between military-connected and civilian households in their extent of preparedness. Data shows that 53% of military-connected respondents say that their current level of life insurance is sufficient to cover all debts and replace five years of income, versus only 39% of civilians. Correspondingly, 84% of military respondents agree that if they were to die today, they are confident their family would remain financially secure versus 71% of civilians.

For those who do not currently have life insurance, this decision is largely considered through a financial lens. Those who reported being uninsured either say it costs too much (29% military and 31% civilian) or they have sufficient financial resources without it (27% military and 13% civilian)—both statistics showing little change from our 2021 survey.

From an overall financial health standpoint, survey respondents report their current household debt estimate to be virtually unchanged from 2021. While 55% of military-connected report having up to $75,000 of debt, just 58% of civilian households report the same.

"Preparedness is key when it comes to dealing with uncertain financial situations like high inflation or unexpected death," said Carter. "Life insurance may be an uncomfortable topic, but it can make an enormous difference for your family in the event of an unexpected death."