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Getting Ready to Go

If you're preparing to retire or electing to participate in DROP, you'll want to know what to consider and what your payout options will be.

What to Consider | Payout Options — Investment Plan | Payout Options — Pension Plan | Payout Options — DROP | How to Apply

What to Consider

What do you want your retirement to be like? Who do you need to provide for in case you die? How long of a retirement do you expect to have? How much uncertainty are you willing to live with? Do you have a spouse or family member you need to provide for? What can you do to make sure you don't outlive your money? What other financial resources do you have? To help you with these questions, you may want to consider using some of the online tools and other resources available to you, such as:

  • Advisor Service - The retirement plan ADVISOR SERVICE on MyFRS.com can help you see where you are and what changes you may need to make.
  • 2nd Election Choice Service - If you haven't used your one-time 2nd Election Choice, you may want to see if switching plans makes sense for you. 2nd Election CHOICE SERVICE can help you see how your benefits compare under both retirement plans, or learn more about the buy-back information for both plans.
  • Health Insurance Subsidy (HIS) - You may be eligible for the HIS, which is an extra payment added to your monthly retirement benefit to help you pay for your health insurance premium in retirement. You will receive $7.50 for each year of service, with a minimum monthly payment of $45 and a maximum monthly payment of $225. Eligibility is as follows:
    • Pension Plan - If you're in the Pension Plan, you're eligible to receive a HIS when your monthly Pension Plan payments begin.
    • Investment Plan - If you're in the Investment Plan, you must have a minimum of 6 years of service (if enrolled in the FRS prior to July 1, 2011) or 8 years (if enrolled in the FRS on or after July 1, 2011), be considered eligible for normal retirement under the Pension Plan rules, and be retired from the Investment Plan before you can receive the HIS.



Payout Options — Investment Plan

Lump Sum Pros Cons
You can take a full or partial lump sum distribution of your account balance.
  • You have a lump sum cash payment that you can use to pay health expenses or other necessary expenses (review the Tax Implications).
  • You will be taxed on the money (see Tax Implications for details).
  • If you don't carefully budget for the entire length of retirement, you may run out of money.
Fixed Annuity Pros Cons
A guaranteed and set monthly payment.
  • Your monthly benefit will always stay the same.
  • You can choose to have your annuity paid to you for a specified period or for the rest of your life.
  • Payments are not subject to market fluctuations.
  • You don't have to choose how your money is invested.
  • You cannot change your payout option once payments begin.
  • You must pay the cost of the annuity from your account balance.
Joint and Survivor Annuity Pros Cons
Monthly payment will provide a continuing benefit (usually ranging from 50-100% of your original benefit) to your spouse or other beneficiary should you die.
  • Allows you to provide a continuing benefit to your spouse or other qualified beneficiary.
  • You get to choose the percentage amount of the continuing benefit.
  • If both of you die, there is no continuing payment to another beneficiary.
  • Your monthly benefit is reduced slightly so that a continued benefit can be paid to your spouse or other qualified beneficiary.
  • You must pay the cost of the annuity from your account balance.
Systematic Withdrawals Pros Cons
A flexible payment schedule where you decide how much money to withdraw, and how often.
  • You get the money you need for your living expenses while still keeping your investment growing.
  • You can change the payment amount at any time.
  • Payments are not guaranteed to last your lifetime.
  • Your payments are affected by market fluctuations.
  • Requires frequent monitoring of your investments - the amount of your withdrawals need to be less than what your investment earnings are to keep pace with inflation.
Combination Pros Cons
You can choose to take a partial lump sum payment and have the balance paid as an annuity. Refer to the Lump Sum Payment and Annuity options above for information. Refer to the Lump Sum Payment and Annuity options above for information.



Payout Options — Pension Plan
Single Life Annuity (Option 1) Pros Cons
Provides you with the maximum monthly benefit for your lifetime.
  • Provides you with the maximum monthly benefit for which you are eligible.
  • Payments are paid to you for your lifetime.
  • Does not provide a continuing benefit for your spouse or beneficiary after your death.
Reduced Life Annuity (Option 2) Pros Cons
  • Provides you with a reduced monthly benefit for your lifetime.
  • If you die before you receive benefits for 10 years, your beneficiary will receive the same benefit you were receiving until the benefit has been paid for 10 years in total to both of you.
  • Provides a continued benefit to your beneficiary for a set period of time.
  • Allows you to choose any beneficiary to receive payment.
  • Payments are paid to you for your lifetime.
  • If you live longer than 10 years after you begin receiving benefits, upon your death your beneficiary is not entitled to a benefit.
Reduced Joint and Survivor Annuity (Option 3) Pros Cons
Provides you with a reduced monthly benefit for your lifetime, with payment of the same monthly benefit to your spouse or joint annuitant (who is financially dependent on you for the remainder of their lifetime).
  • Provides a monthly benefit to your survivor that is equal to what you were receiving.
  • Payments are guaranteed for the lifetime of you and your joint annuitant.
  • No further benefits are payable after both you and your joint annuitant die.
  • Requires you to choose a beneficiary who qualifies as a joint annuitant to receive payment.
Reduced Annuity with 2/3 Survivor (Option 4) Pros Cons
Provides you with a reduced monthly benefit while both you and your spouse or your joint annuitant (who is financially dependent on you) are alive. When either of you dies, the monthly benefit payable to the survivor is reduced to two-thirds of the monthly benefit.
  • Provides for a larger benefit while both you and your joint annuitant are living, and a smaller benefit when only one of you is living.
  • Payments are guaranteed for the lifetime of you and your joint annuitant.
  • No further benefits are payable after both you and your joint annuitant die.
  • Requires you to choose a beneficiary who qualifies as a joint annuitant to receive payment.



Payout Options — Deferred Retirement Option Program (DROP)
Note: This is available only with the Pension Plan.
DROP Pros Cons
  • Allows you to "retire" while continuing to be employed by an FRS employer for up to 96 months (120 months under certain circumstances if employed as "instructional personnel", as defined in s. 1012.01(2)(a)-(d), Florida Statutes).
  • Your Pension Plan benefit becomes frozen and you begin to accrue additional pension benefits in a separate DROP account.
  • When you terminate your employment, you receive two retirement benefits: a monthly payment from the Pension Plan and the payment of your accrued DROP benefit as a rollover, partial rollover and partial lump sum, or a lump sum.
  • Allows you to acquire a tax deferred nest egg that is otherwise not available through the Pension Plan.
  • You must elect your Pension Plan payment option when you enter DROP and you cannot change it at a later date.


The summary above represents just a highlight of the payment options available to you. For more detailed information on the payment options available in the Investment Plan see the MyFRS Termination Kit. For Pension Plan and DROP payment options see the Ready. Set. Retire. publication.




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