In recent months, the nation's personal savings rate took a tumble, which underscored the effects of the recession. But new research shows that military families bucked the trend and increased the dollars they put away for the future.
The latest findings of the First Command Financial Behaviors Index reveal military families with household incomes of at least $50,000 increased the average monthly amount they put into their retirement accounts, and short- and long-term savings increased during the six-month period ending in September. At the same time, savings activity slowed for the rank and file of middle-class Americans.
Military families and the general population traded places in the hierarchy of savings. A year ago military families had lower monthly averages for retirement as well as long- and short-term savings. Now they lead the pack and do so by relatively wide margins.
Investing in the Future
Activity has been especially dramatic in retirement savings. According to our data from the third quarter of 2009, monthly average for military families totaled $973 -- up 23 percent from $792 in the first quarter, which is the highest dollar amount since the Index's first semi-annual military survey in the first quarter of 2008. Average retirement savings for the general population totaled $765, down 25 percent from $1,019.
Save for Short-term Goals
Military families also save more for short- and long-term needs. Their average short-term savings totaled $953, an increase of 11 percent from $855. The general population experienced a drop in short-term savings -- down 3 percent to $885 from $860. Average long-term savings for military families totaled $459, up 62 percent from $284. 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 from $268.
Stick to the Plan for Financial Success
Notably, military households with a financial plan put a higher amount, on average, into saving and investment accounts than military households without a financial plan. During the third quarter, retirement savings for those with a financial plan totaled $1,207 compared to $845 for those without. Similar differences were reported for long-term savings ($789 versus $280) and short-term savings ($1,118 versus $864).
These latest results lend further support to our ongoing findings that military families weathered the recession with more optimism and less stress than the general U.S. population. Saving for long-term needs is one of the specific behaviors that are 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.