A groundbreaking proposal that could help reduce the rate of military suicide – including a likely role for financial planners – has passed the House of Representatives.
The latest measure follows an award-winning Financial Planning investigation that revealed systemic gaps in the military's existing financial education programs and a potential link between these problems and the high military suicide rate.
If passed by the Senate and signed into law, the initiative would provide $400 million over five years, starting in 2016, for improved financial literacy training for soldiers.
Financial stress is a top precipitating factor to military suicide that’s been largely overlooked ever since the military suicide rate began to exceed comparable civilian rates more than a decade ago. The military's all-volunteer force has endured 13 years on a wartime footing through a devastating recession, both of which have contributed to high indebtedness and other financial distress for many soldiers and veterans. The beneficiary of every active-duty soldier who dies from any cause receives a $500,000 life insurance payout and other benefits, potentially acting as an inadvertent incentive to suicide.
In 2013, 479 active-duty troops, reservists and National Guard members killed themselves – most by self-inflicted gunshot wounds or hanging. The official estimate of 22 veteran suicides a day is likely far under-estimated due to lapses in data collection from death certificates. Overall, military suicides account for a disproportionate amount – about a fifth – of all suicides nationwide.
The new recommendations could reduce the kind of stress that can contribute to suicide, according to one of the most prominent co-authors of the legislative proposal.
"We think this is going to have a huge impact on service members' financial security," says retired Army Gen. Peter Chiarelli, the top-ranking retired military officer credited with leading the push to reduce military suicides.
The proposal passed May 15 as part of House approval of the $515 billion National Defense Authorization Act. Ongoing funding of $75 million a year for the financial programs would bring the total cost to billions of dollars over the course of several decades.
The new program upgrades would require the military to assess the effectiveness of its financial training programs annually as part of its overall Status of Force analysis, linking financial health directly to the overall health and fighting readiness of the military.
Despite the high price tag of the program, the military estimates it could save taxpayers more than $100 million a year by stemming the loss of personnel, many of whom lose security clearances due to high indebtedness. The Pentagon estimates it loses 4,700 to 8,000 soldiers annually due to financial distress, costing it between $270 million to $459 million, or about $57,000 per soldier.
"What we are really trying to do is get to the quality of the instruction," says Chiarelli, a co-author of a report by the Military Compensation and Retirement Modernization Commission, whose worked formed the basis for the legislation. “We don't want [soldiers] to have to go through 500 PowerPoint slides. We want a professional to work with soldiers, sailors, airmen, Marines and the Coast Guard to get the financial literacy they need."
That's not the case today. A 2013 survey found that only 12% of service members and their families said they received financial education through military training. However, 90% said they wanted more preventative financial education.
In a parallel development, the military is set to launch a study in July into the links between financial stressors and the military suicide epidemic, a Pentagon spokeswoman said. Financial Planning's investigation prompted legislation mandating that study, which is slated to last five years – roughly tracking the first phase of the proposed financial literacy funding upgrades. That study will be undertaken by one of the most important research initiatives to date, the Army Study to Assess Risk and Resilience in Servicemembers, that has tried to establish the root causes of the military suicide epidemic. Chiarelli was one of the driving forces behind that initiative five years ago.
The new legislation would compel the Defense Department to:
- Assess the financial literacy of troops annually.
- Strengthen and increase partnerships with organizations to enhance financial literacy training.
- Provide soldiers with financial literacy training at every crucial point in their lives and career – from enlistment to retirement. Financial training also should be available upon a soldier's request.
- Direct top leaders to regularly drive home the message of the importance of financial literacy.
- Give every soldier access to an online budget planner.
- Expand the definition of the term financial services to include health insurance options, budget management, savings plan matching, retirement lump-sum options, etc.
Leaders of the FPA's pro bono initiatives expressed enthusiasm for the latest proposal. Last summer, an FPA delegation spent a day lobbying members of Congress to support the legislation that won final approval in December.
Omega Hartman, head of the FPA's pro bono programs, says she thinks the legislation is indicative of an important shift in thinking: The proposal signals that the military is "serious about the necessity of financial readiness," she says.
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