Active-duty families who work with financial planners are out-saving their do-it-yourself colleagues – and feeling more confident in their long-term finances.
Military families who have written financial plans developed through financial advisors boast a monthly savings rate that is 28 percent higher than those without a plan, according to the First Command Financial Behaviors Index®. Not surprisingly, these families are also more confident in their ability to retire comfortably – 45 percent versus 34 percent for families without a plan.
This difference in financial readiness and confidence between those with and without a plan has remained consistent throughout the economic crisis, reinforcing the critical role that professional financial assistance can play in the economic lives of America’s military families, said Master Chief Petty Officer of the Navy (Ret.) Joe R. Campa of the First Command Military Advisory Board.
“This groundbreaking research highlights the critical role that financial advisors can play in improving the financial well being of service personnel and their families,” he said. “Military families can receive real benefits from working with a trustworthy and knowledgeable financial coach.”
These survey results come at a time of growing national interest in improving the financial readiness of America’sarmed forces, said Coast Guard Vice Adm. (Ret.) Jody A. Breckenridge, who serves with Campa and other retired senior flag officers and NCOs on the Military Advisory Board.
“We are committed to helping shine a light on the important financial concerns facing military families today and throughout the year,” she said. “The collective goal of the Advisory Board is to pool our varied experiences in a way that provides an ongoing, unbiased perspective on trends that affect the financial well being of service personnel.”
Notably, these findings come at a time when middle-income military households have been easing back on this critical financial behavior. The average monthly amount that military families with annual incomes of $50,000 or more put into their savings and retirement accounts slipped 17 percent in mid 2010 to end the third quarter at $2,018. Still, these families have continued to out-save the rest of the Middle Class, which achieved a monthly average of just $1,517 during the third quarter.
The decline in savings activity has been accompanied by a shift to debt reduction. The average amount military families are paying on long-term debt has reached $1,255, up considerably from $1,041 during the first quarter of 2008. The average monthly amount military families allocated to short- and long-term debt during the third quarter of 2010 totaled $2,301, a 4 percent increase over the first quarter. Again, military families are out-performing their civilian counterparts. Middle-class Americans saw their average monthly debt reduction efforts slip by 4 percent to $2,159 in late 2010.
Members of the Advisory Board have been quick to praise the overall efforts of the military’s middle class to save more and cut debt, particularly in light of the current economic turmoil.
Sgt. Maj. of the Army (Ret.) Jack L. Tilley said military families “are experiencing the same economic challenges faced by the rest of the Middle Class, but they are out-pacing their civilian counterparts in adopting responsible money behaviors.”
Marine Corp Lt. Gen.(Ret.) John F. Sattler agreed, crediting their financial planning successes to “the disciplined, mission-oriented focus that military families bring to all they do. Their intense focus on personal finance is a model for other Americans who wish to integrate frugal habits into their financial lifestyles.”
Members of the Advisory Board will continue to address the evolving financial needs of military families during their regular meetings.
“I fully expect the subject of increasing savings and cutting debt will be an important part of our discussions,” said Air Force Chief Master Sgt. (Ret.) Kenneth J. McQuiston. “Sound financial behaviors are a key building block for strong military families. While the do-it-yourself approach has its adherents, the Advisory Board firmly believes that the financial services industry is our best hope for improving the financial readiness of those who serve. Financial planning professionals can and must play the primary role in delivering the tools, the knowledge and the personalized coaching that will allow these deserving families to pursue their goals and dreams.”
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First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), 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. Insurance products and services are offered by First Command Insurance Services, Inc. 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. Compiled by Sentient Decision Science, LLC, the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 1,000 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 +/- 3.1 percent with a 95 percent level of confidence. www.firstcommand.com/research Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. Sentient is a full-service market research firm with special vertical expertise within the financial services industry. Sentient specializes in advanced research design and statistical analysis of behavioral and attitudinal data. 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 personalized financial plans that emphasize accumulating wealth while reducing risk, First Command Financial Advisors have established lasting relationships with hundreds of thousands of client families since 1958.