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Average soldier’s net worth at 45 years old and up

Colin Parkinson

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When I left in the 80's I was under $100,000, if I had stayed in and retired now, I be well over a couple of million, mostly thanks to the Vancouver real estate market, with a house now valued at 1.9million.
 

PuckChaser

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Considering people can join when they're 56 or 57, I think your poll results are going to be skewed. You're also not owed any promotions beyond Cpl/Capt, so you could be 45 with 19 years in and still be a Cpl/Capt if you're not good at your job.

At the end of the day, if you're joining the CAF for the money, you're doing it wrong. We're fairly well compensated but you're not getting rich.
 

ontheedge

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PuckChaser said:
Considering people can join when they're 56 or 57, I think your poll results are going to be skewed. You're also not owed any promotions beyond Cpl/Capt, so you could be 45 with 19 years in and still be a Cpl/Capt if you're not good at your job.

At the end of the day, if you're joining the CAF for the money, you're doing it wrong. We're fairly well compensated but you're not getting rich.

Well yes and no. The guys who got in early, worked hard, put money away and filled their pension - retire at 60 with 6 figure pensions.  People can get remarkably “rich” in the army.

I hear you that the military is not a financially lucrative endeavor and doing it for the money is not the right way to go about it.  But let’s get the facts and quantify exactly what that means. How little or how much do people end up with.
 

dapaterson

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Most CAF members have no understanding of their most valuable asset: their pension.  A 45 year old Captain with 15 years in would have a pension with a net present value of around half a million dollars.

Make it a LCol with 25 years, and you're probably over $1.25M in pension value.
 

ontheedge

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dapaterson said:
Most CAF members have no understanding of their most valuable asset: their pension.  A 45 year old Captain with 15 years in would have a pension with a net present value of around half a million dollars.

Make it a LCol with 25 years, and you're probably over $1.25M in pension value.

Thank you for the validation!! I get that people shouldn't join for the money... but... the pension!!  I think they took away the Bridge payment which would have added a lot of value to a pension...

I guess all the "benefits" are hard to quantify.  Consider the health plan is also worth several hundred dollars a month, or more... capitalize that and it's another 6 digits of net present value.

but also I'm curious if folks have used their Military prowess in their civvy jobs and managed to capitalize from it.  You look at all these "Navy SEAL" dudes that have book, websites, etc.  it's like part of the career progression to take the military experience private and build a good business with it, consulting, sale, whatever...
 

dapaterson

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CAF pensions continue to pay a bridge to age 65, as they are combined with CPP.  To my knowledge, there has been no movement to change the CAF plans in any way per the pending changes to the CPP.

 

daftandbarmy

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Colin P said:
When I left in the 80's I was under $100,000, if I had stayed in and retired now, I be well over a couple of million, mostly thanks to the Vancouver real estate market, with a lane wayhouse now valued at 1.9million.

FTFY ;)
 

mariomike

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If you join the Regular Force, and stay in for 35 years, you will max out your pension at 70%.
Based on the average of your best 5 years (pay only, not allowances).

 

mariomike

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AbdullahD said:
Hey Mike some of those links dont work for me. Fyi.

This works and may be of interest to the OP,

ontheedge said:
I'm thinking of joining the reserves,

Reserve Pension- Merged 
https://army.ca/forums/threads/28418.975
48 pages.

For those thinking of joining the Regular Force,

Regular Force enrolled on or after March 1, 2007
http://www.tpsgc-pwgsc.gc.ca/fac-caf/act/apr-aft/nvnw-force-eng.html

 

Cloud Cover

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Start thy purse to fattening:

The Richest Man in Babylon: The Success Secrets of the Ancients--the Most Inspiring Book on Wealth Ever Written https://www.amazon.ca/dp/0451205367/ref=cm_sw_r_cp_tai_Qr4sCb1JFBWRX

I was given this book when I was 18 and just home for leave after basic in Cornwallis. (back then we took home a whopping 700/month after R&Q) .
Bottom line is this: a part of all you earn is yours to keep. Take a percentage, say 5%, of every pay, every tax refund, everything where you are not legally obligated to turn over 100 % of the proceeds, and put it in a special account in your name only. Budget everything else in your life, including all of your other savings and retirement, on the remainder. The book recommends 10% but that is a little tough for some people. The main thing is, save like your life depends on it, because one day it just might.


 

NavyShooter

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When I got my LS/Cpl rank up, and got the associated pay-raise, I chose to use that wisely. 

I saw that on my budget at the time, I could either afford a car, or a house.

I bought a house.

At 22 years of age, with just under 4 years in the CAF, I bought a house.  I've since had 22 years to build equity, (luckily being a sailor in a hard sea trade, I've stayed on the coast and had the ability to do that.)

I'm now in my 4th house.  I was $16K away from being mortgage free in our last one.  I'm now 10 times that, but am in my 'dying' home.

I retire in March (rolling into the PS) after 26+ years, and will see a pension of $46K/yr until age 59, when it will start to be indexed.  At age 65, the amount I get will get reduced by the value of CPP - so I'll see a net zero change as I'll start drawing CPP. 

My wife works as well, and does fairly well in her business (top 3-5% of her chain in 14 of the past 15 years) and so as a team for the past 17 years, we've built our equity, investments, and are working towards the same goals.

I expect we'll be mortgage free in the next 5 years.

We have about $80K set aside for the kids in RESPs right now.

We have a bunch of money in RRSPs and other registered funds.

Our current net worth?  If I recall correctly, the financial counsellor guestimated about a Million. 

Best suggestions to help yourself get there:
1.  Pay yourself.  Start putting $10/pay into an account you cannot use a bank card to withdraw from.  Every year, increase that by $10...so in the first year you'll have 24 pay periods - $240.  Second year, $480.  Third year, $720, Fourth year $960....at $40 a pay, you won't even notice it, but by the end of 4 years, you've got almost $2.5K set aside.  Keep that going for a few more years, and you'll have some serious money set aside.  This is how I built the kid's RESP accounts. 

2.  Pay your visa bill.  Interest payments suck.  Pay it off, don't carry a balance.

3.  Buy a house early in your career.  Build the equity.

Those 3 things will help you immensely. 

NS

 

mariomike

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Financial advice to potential recruits,

Entering the CF and YOUR Money.... 
https://army.ca/forums/threads/26093.0
10 pages.
 

AbdullahD

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Touching on NavyShooter's points... I'd just like to add info to it.. now for my ramble.

-1) Max out your TFSA first, RRSP's only defer tax and depending on your pension and retirement plan the tax savings from RRSP's may bite you later.

A read on TFSA vs RRSP
https://www.dividendearner.com/tfsa-or-rrsp/

Also please do not save, invest this money! (Semantics lol)
https://m.economictimes.com/slideshows/investments-markets/5-reasons-why-you-should-invest-savings/slideshow/51666445.cms

How much to save. I do not agree with save x% of your income anymore generally, I follow the execute a plan to obtain your dream model these days. This link will help with that.

https://www.investopedia.com/articles/personal-finance/022216/i-make-50k-year-how-much-should-i-invest.asp

Now when looking at how much you save per month remember the pension contributions. That can be counted towards the retirement fund and drastically changes how much you need to save. So potentially depending on how much you want to live off of in retirement you only need a touch more to obtain it, the rest can go to medium term goals. Also if they have "group" retirement programs.. take advantage of them especially if they come off of your payroll you will never miss it! Between my CN rail pension, my CN share program and group RRSP I am saving $3,100/mo on average and I do not even notice. What you do not realize you have, you will not be tempted to spend, I have all my statements etc go straight to my spam box so I never see them so the temptation is not there.

A better read regarding not spending your cash.
https://www.halfbanked.com/avoid-spending-your-savings/

-2) yep bad debt is evil. But good debt isnt, invest in good debt only.
https://www.debt.org/advice/good-vs-bad/

A form of good debt is using a loan to fund your RRSP, but it is high risk (albeit the interest on the loan is a tax write off when you invest it in an RRSP and you could use that money for the first time homebuyers plan to get a house).
https://www.sunlife.ca/ca/Learn+and+Plan/Money/Retirement+savings/Should+I+borrow+to+contribute+to+my+RRSP?vgnLocale=en_CA

-3) Buying a home is generally a good idea.. but sometimes renting is cheaper in the long run due to land taxes, insurance and repairs. Where I live my house was $270k and I can rent it out for $3,000/mo (it has a legal suite fyi) so it makes way more sense to buy here... but somewhere else it makes more sense to rent so, double check, you never know but sometimes not buying makes sense.

https://www.realtor.com/mortgage/tools/rent-or-buy-calculator/

Also some pundits are thinking realty is going to crash soon, I would take it with salt.. long term realty is awesome and these little dips are nothing if your going to be there 25 years.. but if you plan on selling relatively soon.. beware.

https://www.fool.ca/2018/10/27/can-your-retirement-survive-an-upcoming-real-estate-crash/

Now something my wife and I plan on doing is buying up houses as we move and renting them out.. so if you can do that and make money it becomes very beneficial. My wife and I have decided that I will stay with CN for a couple years until I have the money lying around to buy another house wherever the RCN puts me assuming they will have me, without touching the equity in the house we have now. Then if I get posted again relatively quickly I can pull the equity out of the first house to buy a third or if renting is not profitable on one of the places I'll sell it. But a decent calculator for rent profitability, cause let's face it the stereotype is the Armed forces likes shipping guys around.

https://www.calculator.net/rental-property-calculator.html

-4) This is my own little point, it is only money, never forget that. Plan, budget and prepare for everything financially, but do not become a scrooge. Three years ago or so if you would have asked my networth when I first joined this site.. I'd say 5-10k tops, now my networth is roughly $125,000 and I am 32 well 33 in a month but any rate.. 3 years ago I was a financial deadbeat, now not so much. Fortunes come and go, so do not get to caught up in it, do your best and leave the rest to God/fate/destiny whatever you want to call it. I personally believe you will be richer for it and not just financially.

Abdullah

P.s I enjoy do financial mental gymnastics, this is addressed to anyone reading who wants a nobodies advice regarding money. Talk to a financial planner/adviser for proper advice.
 

Teager

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Just to add if your someone that struggles with saving money for the future there's an app for that. Mylo rounds up all your transactions and puts that money into investments/savings/TFSA/RRSP you can choose what you want, level of risk, and goals. You do have a portfolio manager and it only costs $1 a month. I'm surprised at how much I've saved with simply rounding my transactions for the last 6 months.

https://mylo.ai/about/
 

Navy_Pete

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Be careful buying a house; the day of real estate automatically building equity are gone and some markets (particularly around some of the army bases) are riding a pretty good bubble.  It really depends on the area, the local market, etc.  For example, there are a few lawsuits against the gov from people losing their shirts when moving from cold lake/Edmonton when the market cratered with the oil sands.  Similarly, even with a good salary and some savings, the majority of us wouldn't be able to afford much in places like Toronto, Vancouver, Victoria etc anymore, so there is a big element of luck and timing involved as well.  The era of buy low, sell high belonged to the boomers, with gen x getting the tail end, but pretty much at 'buy high, hopefully sell a bit higher' now.

Worth talking to a financial wizard about, but you may be better of financially renting and investing the delta. Really depends on your goals too and who little you are prepared to live with (like the freedom 35 people that live like spartan hermits). 

If you use common sense and are reasonable with your budget, you shouldn't have trouble paying the bills, but doesn't take much to run into something that runs you off a cliff.  Probably reasonable though to lump us in as solidly middle class, but even streaming up and getting promotions ASAP, you won't get rich (but should be comfortable).
 

dangerboy

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Navy_Pete said:
Be careful buying a house; the day of real estate automatically building equity are gone and some markets (particularly around some of the army bases) are riding a pretty good bubble.  It really depends on the area, the local market, etc.  For example, there are a few lawsuits against the gov from people losing their shirts when moving from cold lake/Edmonton when the market cratered with the oil sands.  Similarly, even with a good salary and some savings, the majority of us wouldn't be able to afford much in places like Toronto, Vancouver, Victoria etc anymore, so there is a big element of luck and timing involved as well.  The era of buy low, sell high belonged to the boomers, with gen x getting the tail end, but pretty much at 'buy high, hopefully sell a bit higher' now.

Worth talking to a financial wizard about, but you may be better of financially renting and investing the delta. Really depends on your goals too and who little you are prepared to live with (like the freedom 35 people that live like spartan hermits). 

If you use common sense and are reasonable with your budget, you shouldn't have trouble paying the bills, but doesn't take much to run into something that runs you off a cliff.  Probably reasonable though to lump us in as solidly middle class, but even streaming up and getting promotions ASAP, you won't get rich (but should be comfortable).

To echo that, for all sorts of reasons I have lost money selling my houses on every posting I have had.
 

daftandbarmy

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One of the best things I saw someone else do was to bring in some financial advisors to sit down with the troops (many of whom were under 20 years old) and walk them through some simple financial planning.

The ones who were going to drink away all their paycheque weren't going to pay attention, of course, but there were a surprising (to me) number of troops who were very interested and started managing their money differently, and better.

There were also never any shortages of people who had their hands up for various tours etc, which meant that you could sock away your full paycheque and allowances and exponentially increase your savings.
 

Quirky

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Navy_Pete said:
Worth talking to a financial wizard about, but you may be better of financially renting and investing the delta. Really depends on your goals too and who little you are prepared to live with (like the freedom 35 people that live like spartan hermits). 

Is there a PMQ/rent vs Purchase calculator to use? Having lost around $50k on my home leaving the cancer that is Cold lake, I’m really debating on whether to buy at new posting is a good option. Living in a PMQ now isn’t the best, but after all the bills are paid - heat/power/cable/internet/insurance I’m well under $1000/month. Add my spouse salary which is comparable to mine, living expenses are essentially 10% of our combined monthly net income. I walk to work and while she isn’t military, also works on base, so fuel costs are low. Then you take purchasing, for a modest 350k house, will include $4k property tax, mortgage interest rates, costs to maintain, increased heating and power, more costs in fuel to commute to base everyday etc etc. Even though mortgage default insurance is covered on purchase and realtor fees on selling (assuming posting), is it really worth it, financially, to buy vs PMQ if I only plan to be here 5-7 years? This is assuming the property stays the same value over that time.
 
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