Following months of anxiety and concerns over sequestration and defense downsizing, America’s career military participated in this year’s Military Saves Week (Feb. 24 – March 1) with a set of proactive financial strategies that have been helping them to out-save other middle-class Americans and feel more secure and optimistic about the future.
The First Command Financial Behaviors Index® reveals that 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 putting considerably more dollars towards short-term savings than general population households with similar incomes. For 2013, the average monthly amount military households put into short-term savings exceeded that of the general population by more than $500 – a clear indication that many servicemembers and their families committed to the Military Saves Week campaign goal to strengthen the monthly savings habits in active-duty households.
What strategies are military families using to shore up their finances in the face of sequestration? When asked how they are preparing for sequester cuts, survey respondents indicated they are:
- Cutting back on everyday spending (49 percent)
- Increasing the amount they are saving (36 percent)
- Decreasing the aggressiveness of their investments (14 percent)
- Moving investments to cash (11 percent)
- Starting to work with a financial advisor (10 percent)
Notably, military families who work with a financial advisor are putting almost twice as much money into short-term savings as those who don’t work with an advisor. During the fourth quarter, their average monthly rate totaled $1,228. In contrast, those without an advisor averaged just $683.
The impact of working with a financial advisor is particularly evident in long-term savings behaviors. Military families who work with a financial advisor indicated that they put an average of $1,133 per month into long-term savings. That’s about four times the $278 per month socked away by those who don’t work with an advisor. And the average monthly retirement savings rate is $1,657 for those with an advisor versus $1,055 for those without.