Florida Retirement System Overview

Do you have questions about the Florida Retirement System (FRS) or about your retirement benefits in general as a Florida public employee? The State of Florida has two main retirement options for employees. You can choose between the FRS Investment Plan or the FRS Pension Plan.

If you are a new employee, you have eight months from your hire date to decide which plan you want to participate in. If you’ve been an employee for a while, you are already part of one of these retirement options.

Each FRS component has its own nuances and rules, so it’s helpful to know the basics of what they involve. Here is a quick rundown of the Florida Retirement System and the various benefits that it provides.

FRS Pension Plan Basics

There is a vesting period requirement. If you joined the pension plan before July 1, 2011, it takes six years of creditable service to be vested. If you joined on or after July 1, 2011, then vesting takes eight years of creditable service. Your eligibility for monthly payments depends on whether or not you are vested when you retire, and if you are within 20 years of your expected retirement age.

After you retire, you might also receive a cost of living adjustment (COLA) to help account for inflation. Whether or not you will receive a COLA depends on your FRS enrollment date. If you joined on or after July 1, 2011, you won’t receive a COLA.

Certain FRS Pension Plan members may be eligible for special programs, such as the Deferred Retirement Option Program (DROP). Ask us if you have any questions about this.

Don’t Understand Your Pension Benefit?

If you have questions about which Florida Retirement System benefits you are entitled to, you can give us a call at 877.476.9723. We will ask you some questions and go over a personalized retirement benefits walkthrough with you.

Some public employers that are covered by FRS have their own benefits nuances or “gotchas” that you might not know about. We will help you understand those unique situations and see how your benefits fit into your financial future.

This retirement review will enable you to see where you are with your benefits, their future values, how much income you might receive in retirement, and how much more money you might need. All at no cost or obligation to you.

Key Facts About the FRS Investment Plan

The FRS Investment Plan is a defined-contribution plan. It’s similar to a 401(k) plan in many ways. Your retirement income will depend on how much you contribute to the plan over time, how much your money grows, and how well those funds are managed.

You make contributions to your retirement plan over time, alongside contributions from your employer. Every paycheck, roughly 3% of your gross salary gets deducted and put into the FRS Investment Plan. The amount of the state’s contribution depends on your membership class (job position).

What to Know About FRS Investment Plan Options and More

Since the FRS Investment Plan is a tax-deferred plan, contributions aren’t taxed, but your withdrawals (or when you take out money) will be. When you participate in the plan, you get to decide how your money is invested, and there are 19 investment funds for you to choose from. You are responsible for the investment decisions with the investment plan.

Once you have completed one year of service with the State of Florida, you will be able to take your vested contributions out of the plan if you need to leave the state. You also have the option of leaving it in the FRS investment plan.

Should you need to request a distribution, you can keep the tax-advantaged status of your funds intact by transferring your money over to an IRA or a different employer’s retirement plan. You may withdraw your contributions as cash, just know that you will be taxed on the withdrawal unless you roll it over into another tax-advantaged account.

Once you elect to take a distribution (no matter the method), you will be treated as if you were retired. That applies no matter how old you actually are.

Will Your Florida Retirement System Benefits Provide Enough Income?

According to the Florida Department of Management Services, most FRS covered employees’ retirement income will only be about 78% of what their working income was. This includes both Social Security and their employer-sponsored retirement plan.

That can create a retirement income gap that it’s prudent to address before you retire, especially given the likelihood of inflation over your retirement years. There are plenty of options to consider.

You can call us at 877.476.9723 for a free retirement benefits overview. This is a personalized walkthrough that usually takes an hour. We can cover all of your retirement benefits, including pension and survivor benefits, and give you specific numbers to help you craft your retirement plan.

Key Retirement Considerations

There are some important things to consider when you are developing your retirement plan. Thinking about them carefully may help with preparing effectively for your financial future. These questions can be a starting point:

• How do you picture your life during retirement?
• Will you finally retire and be done with the daily grind for good?
• Will you start a new career, volunteer, or maybe become an entrepreneur? What financial resources will you need?
• How much will it cost to live the life you want?
• If your ideal retirement involves the occasional cruise or vacation, will you have enough money coming in?
• How much are your current investments generating for retirement?
• How much of your retirement income is guaranteed?
• Can you count on your money to be there when you will need it?
• Will you have enough for the lifestyle you hope to enjoy?

It’s important to factor in less-frequent spending, such as getaways in retirement, so you actually get to do the things you want. If you don’t plan for your vacations, you might not be able to take them. Also, factor in irregular housing expenses like hot water heaters, or roofing.

In retirement planning, many things are uncertain. Market volatility, future tax burden, and inflation are just a few major hurdles in any retirement plan. While you may have some control over your investment choices in your employer-sponsored plan, it doesn’t guarantee that they will produce a high return. You may wish to discover ways to offset risks like market volatility and inflation and include them in your retirement plan.

Request Your Florida Retirement System Benefits Review

If you know some, but not all of these answers right now, that is okay. We can go over your specific retirement benefits with you so that you have your exact numbers.

We will help you create a retirement plan based on your Florida Retirement System benefits, Social Security, and guaranteed income options so that you have a comfortable, fulfilling retirement.

Get started today with a personal retirement benefits review. Contact us today, and we will go over different options for your retirement planning goals as well as personal financial picture. We look forward to answering your FRS questions and being of service to you.