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Retirement income planning: turning three sources into one number.

A pension that pays monthly. A lump sum that arrives once. Accounts that pay nothing until you make them. Getting them to behave like a paycheck is a decision, not an outcome.

An older couple sharing a warm moment on a sofa at home

What is actually different about an FRS retirement

Most retirement income planning assumes a pile of money and a withdrawal rate. That is not your situation.

You have a pension paying a fixed monthly amount for life, possibly with no COLA at all, if your service is post-2011. You may have a DROP accumulation arriving as a single event. You have a 457(b) or 403(b). Maybe an IRA or Roth. And Social Security, whenever you decide to start it.

Five sources, different tax treatment, different timing, different permanence. The planning question is not how much to withdraw. It is what to draw from, in what order, and in which year.

If your money is in the Investment Plan, there is no pension paying a fixed amount for life. The account pays nothing until you draw from it. So here the question does include how much to withdraw, along with what to draw from, in what order, and in which year.

The FRS pension sits at the centre, paying monthly for life. A DROP accumulation, Social Security, a 457(b) or 403(b), and an IRA or Roth arrange around it. Each is labelled by how it pays rather than by an amount. FRS Pension monthly, for life DROP accumulation arrives once Social Security starts when you choose 457(b) / 403(b) pays nothing until you make it IRA or Roth different tax treatment
How the sources relate, not what they are worth. Each is labelled by the way it pays.

The year everything lands

More than one of those five can land in the same tax year, and some of the timing is still yours to set.

Your DROP distribution and your first pension payments can arrive in the same year. If you also take a 457(b) distribution to bridge a gap, and if a spouse is still working, that is one year carrying a great deal of income. It can affect more than the tax bracket, including the Medicare Part B surcharge two years later.

None of that is a reason to do anything in particular. It is a reason to know which year is which before the elections are filed rather than after. We do not prepare returns or give tax advice; this is where a qualified tax professional earns their fee, and we would rather coordinate with yours than guess.

The gap years

If you retire in your fifties, you have a stretch before Social Security at 62 and Medicare at 65 where income comes entirely from you. Special Risk members frequently face a decade of it.

The pension is already running. What fills the rest (DROP proceeds, deferred comp, savings) and in what sequence, sets up everything after. Spending the wrong account first is not usually a disaster in year one. It shows up in year twelve.

Inflation, without a COLA

If all your service is after July 1, 2011, your pension pays the same number in year one and year twenty-five. Eligible Special Risk retirees now have a 1.5% minimum COLA after five years of retirement. Everyone else has whatever their pre-2011 service earns them.

A fixed pension is not a problem. A fixed pension that everyone assumed would grow is.

How we work on it

We map your sources, their tax treatment, and the years each is available, then look at the sequence. We do not project investment returns and we do not tell you what your accounts will be worth.

Investment framework

Your pension is only one piece of the portfolio.

When we manage investments, the allocation is built around what the portfolio needs to do, not a one-size model.

  1. Start with the goalRetirement objectives

    What the portfolio has to do, and by when.

  2. What the plan can absorbRisk capacity

    How much variability the plan can absorb without changing your life.

  3. The mixAsset allocation

    The mix of stocks, bonds, and cash that fits the objective and the timeline.

  4. What goes insidePortfolio construction

    Diversified, low-cost holdings inside each part of the allocation.

  5. Which account, which orderTax considerations

    Which account holds what, and which account pays out first.

  6. One monthly numberIncome strategy

    The pension, Social Security, and withdrawals, turned into one monthly number.

  7. RevisitedOngoing monitoring

    Revisited as markets, rules, and your life change.

Investing involves risk, including the possible loss of principal. Past performance is not a guarantee of future results. Educational only. Not a recommendation for any account.

Important

This page is educational and is not individualized advice. Benowitz Wealth Management is not affiliated with, endorsed by, or sponsored by the Florida Retirement System, the Florida Division of Retirement, or the State Board of Administration of Florida. Confirm the figures that apply to your own record at MyFRS.com or with the Division of Retirement.

Consult a qualified tax professional regarding your specific situation.

Which dollars you spend first changes both the tax bill and how long the money lasts.

Independent, fee-only retirement planning for Florida’s public employees, built around your FRS benefit and everything you’ve built on the side.

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