- If a person reaches the age at which he can first retire -- the minimum retirement age -- before he has completed the number of years of federal government service that would allow him to retire, then making a military deposit may allow him to retire quicker. This is because making a military deposit can help him count his military service towards the minimum number of years of service.
- A number of situations exist in which, by making a military deposit, a person can actually receive a higher annuity when he retires from federal service. However, in some instances, a person will not receive enough in his annuity to cover the cost of the military deposit. To determine which of these is the case, the person will need to consult an accountant or personal financial adviser.
- In some cases, paying a military deposit will not actually help the person retire earlier or, as discussed, will not increase the size of his annuity. In such a case, the person will effectively be losing money by making the military deposit. In addition, this will also represent a waste of time and effort, and can make your retirement planning more confusing than is necessary.
- Another potential disadvantage of making a military deposit is that it ties up money in a retirement plan -- the federal government -- that is relatively conservative. While many people prefer retirement plans that are conservative and safe, other people wish to speculate more. In such a case, they may prefer to put their money in a higher risk, higher reward category of investment, such as the stock market.
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