Frequently Asked Questions
Navigating the Florida Retirement System (FRS) and managing your finances in retirement
can be difficult without some guidance from a knowledgeable financial advisor. Review our
advisors’ insight on some frequently asked questions and schedule your complimentary
Retirement Review today.
What is the Deferred Retirement Option Program (DROP)?
DROP is a program that allows you to retire from the State of Florida without terminating your employment for up to five years while your monthly retirement benefits accumulate and earn interest in the FRS Trust Fund. At the time your DROP participation begins, you stop earning service credit toward a future benefit and your retirement benefit is calculated. Upon termination, your DROP account is paid to you as a lump sum payment, a rollover or a combination partial lump sum payment and rollover. Monthly benefits are paid to you in the amount as calculated upon entry into DROP, plus any applicable cost-of-living adjustments for intervening years.
Who is eligible to participate in DROP?
DROP is available to all vested members of the Florida Retirement System (FRS) who are in the FRS Pension Plan, Teachers’ Retirement System (TRS) and State and County Officers and Employees’ Retirement System (SCOERS) who have reached normal retirement age or date. Application for DROP must be made within a specific time period that is based on when you enrolled in FRS.
Should I enter DROP or stay in the FRS?
One of the most important decisions you’ll make is whether you should enter DROP or remain in the FRS. To assist in this decision, the Division of Retirement will provide estimates of the benefits you will receive if you retire and participate in DROP and if you retire without participating in DROP. Once you have these estimates, you should meet with your financial advisor to review your total financial situation, including FRS and/or DROP benefits, personal investments, and Social Security benefits, to determine which choice is right for you.
Why is it important to plan ahead for DROP?
If you’ve recently entered DROP or have plans to enter soon, you have five years to save for the rest of your life. If you have been in DROP for a while, you have even less time. Don’t procrastinate. Whether your DROP exit date is next month or a few years away, Capital City Investments advisors encourage you to seek counsel now. It is not too late to revisit your retirement plans and be sure you are prepared for the next step.
How do I receive my DROP account money?
Your accumulated DROP benefits may be paid to you after your DROP employment termination is verified and you select your DROP payout method. Three methods of DROP payout are a direct rollover to an eligible retirement plan, a lump sum payment, or a combined partial lump sum payment and rollover. Your advisor can help you determine the appropriate method of payment for your circumstances and in which retirement account types to place your money.
When should I start collecting social security?
While there is no recommended age to begin collecting Social Security, you should discuss the decision with your advisor and base it on individual and family circumstances. You may begin collecting Social Security payments as early as age 62. However, this could mean to a 25% reduction in lifetime benefits and income restrictions. The full Social Security age (retirement age) is 66 or 67, depending on the year you were born. At this age, there are no income restrictions and the payment amount usually is larger when collecting Social Security. Lastly, if you wait until age 70 to collect Social Security then you typically see an 8% increase in your benefits for every year past your full retirement age. There is no benefit to waiting until after 70 to begin collecting Social Security.
How do healthcare costs affect my retirement plans?
According to a U.S. Bureau of Labor Statistics study in 2017, employers on average subsidize 80% of the cost of healthcare premiums for their active employees and more than two-thirds of the costs for family coverage. Employer subsidies typically end when you retire, so speak to your advisor about how to account for these costs in your retirement plan.
What is the cost to have my retirement accounts managed by Capital City Investments?
We offer a fee-based model, which may be a cost-efficient approach to asset and income management. Our proposed strategies are comprehensive and partner-driven utilizing some of the nation’s most prominent investment firms. To administer our clients’ estate and risk management needs, we have built alliances with independent insurance brokerage firms as well as some of the nation’s largest insurance companies.
When I meet with a Capital City Investments advisor, what questions should I ask her or him?
Just like your advisor wants to get to know you, it’s important to get to know your advisor. Ask you advisor any or all of the following questions to understand more about his or her experience and how it can benefit you:
- What experience and qualifications do you have?
- What is your established financial planning process?
- What are my costs and how do you get paid?
- Do you work with other professionals, like attorneys and accountants, when doing financial planning?
Why I should I choose Capital City Investments for my financial planning?
The simple answer is we believe every retiree or soon-to-be retiree needs a retirement plan developed with a knowledgeable, experienced advisor. Our advisors understand the choices you’re facing as a participant in FRS or DROP and want to help you navigate the complexities of these retirement benefits so you can be confident in your retirement plan. By working one-on-one with State of Florida employees, we can analyze your individual goals, assets, liabilities and opportunities and establish a solid financial management plan. We believe having a plan promotes vision and consistency, and provides a framework of understanding between you, your financial advisor and your other professional advisors (CPA, attorney, etc.).
Ready to Get Started?
Schedule a no-obligation Retirement Review today.