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It takes an above average person to become a military officer. Above average just means better than 50% of the population. I would say usually military officers represent the top 25% of society, which is pretty scary when you consider some of the officers I’ve encountered in my years in the Air Force.
There are four main routes to becoming an officer, all of which attract above average people:
- The Academies: West Point, Annapolis, and Colorado Springs
- Reserve Officer Training Corps or ROTC: Army, Navy, and Air Force
- Officer Candidate School or Officer Training School: all branches
- Direct commission, usually only for the medical and chaplain corps
The process of applying to the service Academies takes years, top grades, a difficult nomination from a Congressman or Senator, a decent SAT score, and the ability to pass a physical fitness test. It’s estimated only 1 in 2000 who begin the application process attend.
Once you’re accepted at an Academy, you will have to get through your initial training in your “plebe” year and many more strenuous assessments throughout your four years. The constant pressure of military training and academic study through your four years of college makes the Academy route one for above average people.
If you go the ROTC route, you’ll have difficult summer training programs to attend and additional class work and leadership training beyond what your civilian peers are taking. And if you do the Officer Training School route, you’ll need at least a bachelors’ degree in addition to surviving a several month indoctrination and leadership course. While both of these courses may seem easier than the Academy route, above average officers can come from any recruiting source.
The Average Net Worth of the Above Average Officer
An officer is definitely more than what is in his/her bank account. You could be the best leader in the world and drowning in credit card debt, driving two cars you can’t afford, and not investing anything into the TSP.
Usually the above average officers want to excel in all aspects of their life. In this article I’m only going to examine how much an above average officer will have saved throughout their career.
The above average officer:
Knows to not completely rely on the military retirement system
- Tracks all their investments in one place with Personal Capital
- Banks with a military friendly bank or credit union like USAA
- Understands what a good deal the Roth TSP is and invests regularly
- Knows that spending more than you earn makes no sense
- Never carries a balance on their credit card, but they do use a cashback credit card to get money back for their purchases
- Doesn’t take out the USAA Career Starter loan unless they are investing it or paying off a higher interest rate loan
A few assumptions:
- These numbers are for a single officer. Spousal income should only increase your total net worth or standard of living.
- No student debt, because most military officers’ come from ROTC (scholarships) or the Academies (free)
- No USAA cadet loan, because you are smarter than the average cadet
- Because you move quite often, we’ll assume that you buy your first house late in your career (when you make O-4)
- 4% investment returns, which are a bit below average for the stock market
- The numbers are listed for years after entering service. So as a first year O-1, you won’t have received your first paycheck yet. As a 27 year old O-3, you’ll have just promoted from O-2 at your 4 year time in service mark.
|Age||Rank||Roth IRA||Roth TSP||Taxable Investments||Home Equity||Total Net Worth|
- A smart second lieutenant (O-1) with a year under his/her belt should have saved $10,000
- A financially savvy first lieutenant (O-2) should have $57,000 tucked away, by maxing out his/her Roth IRA and Roth TSP.
- Once you’ve been a captain (O-3) for two years, you can start making substantial taxable investments, while still maxing out your Roth IRA/TSP. You should be able to invest an additional $1000-1200 per month. As a 4 year captain you should cross the quarter million mark in net worth.
- Congratulations on making major (O-4)! After four years as a field grade officer, you should have over half a million invested.
- As you near retirement as a lieutenant colonel (O-5), you should be hitting that million dollar mark. Congratulations on a long, successful career and saving over a $1,000,000. You’ll be able to safely withdraw $30,000-$40,000 per year from your investment accounts in addition to your military pension. Financial independence is yours!
So how are you doing? Do you consider yourself above average when it comes to money in the military? Where do you fall on this chart? Doing better than these numbers or are you behind?
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