As many middle-class Americans struggle to improve their monthly savings habits, families of military professionals and federal employees have bucked the trend by significantly increasing the dollars they put away for the future.
Recent research from the First Command Financial Behaviors Index™ reveals that military professionals and federal employees with household incomes of at least $50,000 have bumped up the average monthly amounts they are putting into their retirement accounts and short- and long-term savings. At the same time, the rank and file of middle-class Americans have watched their monthly savings tumble.
“We are pleased to see that the people in the two professions we most frequently serve are setting the pace for positive savings behaviors,” said Scott Spiker, CEO of First Command. “During a period when many middle-class consumers struggle to spend less and save more, the families of federal employees and military professionals have significantly increased the dollars they are putting away for the future.”
The overall gains have been particularly dramatic among military professionals, who recently traded places with the general population in the hierarchy of savings. In 2008, military families had lower monthly averages for retirement as well as long- and short-term savings. The most recent data from our semi-annual military and federal employee surveys illustrates this shift.
During the six-month period ending in September 2009, military families saw their average monthly contributions rise 23 percent to $2,385. Contributions by federal employees rose 56 percent to $2,289. Monthly savings by the general population fell 11 percent to $1,923. Median values followed the same general trend, as seen in the accompanying chart.
Military families are the top savers for short- and long-term goals. The latest Index data reveals that military families saw their average short-term savings total $953, an increase of 11 percent. Short-term savings by federal employees reached $705, also up 11 percent. The general population experienced a drop in short-term savings — down 3 percent to $860. Average long-term savings for military families totaled $459, up 62 percent. Contributions by federal employees increased 145 percent to $196. The general population also experienced an increase in long-term savings, though considerably smaller in dollars and percentage change. Their average was $298, up 11 percent.
But federal employees are the leaders in savings for retirement. Average monthly contributions by federal employees surged 85 percent to $1,388. Military families saw their retirement savings increase 23 percent to $973. Average retirement savings for the general population plunged 25 percent to $765.
These latest results lend further support to First Command’s ongoing findings that military and federal employee families have weathered the recent period of economic turmoil with more optimism and less stress than the general U.S. population. Saving for long-term needs is one of the specific behaviors associated with feelings of financial hope and optimism. Boosting savings and reducing debt helps people feel less stressed and better able to withstand the ups and downs of the economy.
“You don’t have to be a federal employee or member of the military to experience this lift, either,” Spiker said. “Those who work with a financial professional and have a financial plan feel more financially secure and optimistic, especially in times of economic uncertainty.”
First Command’s research has consistently revealed that a family earning $50,000 per year can achieve the same level of financial hope and confidence as a family earning $100,000 per year or more — if it is managing money according to a sound financial plan. First Command Financial Advisors are well equipped to help clients develop the disciplined, lifelong behaviors that can enhance financial well-being and long-term security.
“The behaviors encouraged by a financial plan through a financial advisor provide a lasting foundation for financial well-being,” Spiker said. “These families feel more secure, more optimistic about their future and more confident in their ability to pursue their retirement objectives. A disciplined approach to saving is certainly one of the most important keys for pursuing long-term financial goals and lifetime dreams.”
First Command Financial Services, Inc. is the parent company of First Command Financial Planning, Inc. (Member SIPC, FINRA) and First Command Bank (Member FDIC). Financial planning services and investment products, including securities products are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Financial Services, Inc. Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. In certain states, First Command Financial Services, Inc. is a separately registered domestic corporation and does business in California as “First Command Insurance Services.” A financial plan, by itself, cannot assure that retirement or other financial goals will be met. Sentient Decision Science, LLC, was commissioned by First Command to compile the Financial Behaviors Index™.