Servicemembers saving more in face of sequestration concerns
Worries over sequestration and defense downsizing are continuing to drive a savings surge in America’s career military, with those who work with a financial advisor putting away the most dollars for both near- and long-term goals.
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) intensified their already-strong savings efforts during the second quarter of 2014. Short-term savings averaged $1,185 per month, up 10 percent from the first quarter. Retirement and long-term savings grew 4 percent to a monthly average of $2,460. All told, the average monthly savings rate is up 20 percent from the end of 2013.
This savings surge is being propelled by worries over sequestration and defense downsizing. The Index shows that over six-in-ten military families (65 percent) expressed feelings of anxiety about sequestration during the second quarter. June survey data showed that the top action taken by military families to deal with sequestration was to increase the amount of savings. This action was reported by 44 percent of respondents.
Military families who work with a financial advisor are leading the savings trend. During the second quarter, they added $616 more in short-term savings and $1,961 more in retirement and long-term savings than their do-it-yourself counterparts. Looking ahead to their savings intentions, those with a financial advisor are more likely than those without an advisor to anticipate increasing their savings (38 percent versus 22 percent).
These current and future savings efforts helped to propel the Index’s behaviors sub-index ahead 12 points to 142 and the intentions sub-index ahead 25 points to 122, driving the overall Index score up 10 points to a record-high of 131 for the second quarter. The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.
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