RETIREMENT | SECOND HALF 3rd quarter Game of Life RETIREMENT | SECOND HALF 3rd quarter

How to Navigate the 3rd Quarter 1st Quarter – Education 2nd Quarter – Work 3rd Quarter – Retirement 4th Quarter – Rest Investments, FRS, Social Security, Medicare July 1, 2011 – IMPORTANT DATE

Looking at it from the sidelines Game Pieces Looking at it from the sidelines Choices you need to make Skills to be developed Choosing Plan Pension or Investment Education of Choices Deciding When to Retire Retirement Date Requirements & Eligibility for Retirement DROP Retirement Plan Option Understanding the Plans Retirement Benefits Insurance Employer Health Insurance Subsidy Costs Associated Pension COLA (July 1, 2011) 3% Prior to 7/1/2011 Computing your % Pension Growth per Year

Florida Retirement System Required Materials www.myfrs.com Florida Retirement System Planning for Retirement FRS Pension Plan Summary Pension Plan Member Handbook Investment Plan or DROP Guide Reading Publications Computer, Laptop or Tablet Printer Online Bank Accounts Technology Tools

Choosing a Plan Pension Investment

Deciding When to Retire Requirement - You must be VESTED. Enrolled in FRS on or after July 1, 2011 – you will be vested in Pension Plan after 8 years of creditable service Enrolled & actively employed on July 1, 2001 or first enrolled between July 1, 2001 and June 30, 2011 you will be vested in Pension Plan after 6 years of creditable service. Payment is the last day of the month Why is this important?

Qualifying for Normal Retirement Enrolled in FRS before 7/1/2011 Vested AND age 62 OR the age after 62 when you became vested 30 years of creditable service before age 62 Enrolled in FRS after 7/1/2011 Vested AND age 65 33 years of creditable service before age 65 Early Retirement Pension Vested AND within 20 years of normal retirement age Benefit reduced by 5% for each year under normal retirement age

Deferred Retirement Option Program (DROP) Voluntary program for FRS Pension Plan members who qualify for normal retirement Under DROP Stop earning service credit toward a future benefit. Retirement benefit is calculated and set. Monthly retirement benefits accumulate in FRS Trust Fund, earning tax-deferred interest while you continue to work with FRS employer. (1.3%) Benefit calculated on total years of FRS service, age when you start DROP and benefit payment option chosen Up to 60 months Certain K-12 instructional positions with school districts may participate beyond 60 months up to 36 more months “if approved by employer.”

Deferred Retirement Option Program (DROP) Deferral of Drop Exceptions (Admins) Enrolled in FRS before 7/1/2011 Reach normal retirement date based on years of service before you reach age 57 You may defer DROP participation AND elect to begin at anytime up to the month you turn 57. If you fail to make an election before the month your turn 58 YOU ARE NO LONGER ELIGIBLE

Retirement Plan Choices All are required to choose one of the 4 plans Continuing monthly benefit to retiring member for member lifetime. Reduced monthly benefit to retiring member for members lifetime with 10 years certain (i.e., if member dies within 120 months (10 years) of retiring the member’s surviving beneficiary would receive the benefit for the remaining months). This includes the 5 years of DROP. Reduced monthly and continued lifetime benefit in same amount to member’s surviving joint annuitant (exceptions). Reduced lifetime benefit to member and joint annuitant and upon death of either the amount is reduced to 2/3 of existing benefit.

Benefit Calculations Request an estimate at FRS Prior to 7/1/2011 Average of the 5 highest fiscal years of salary earned during covered employment. Sick leave not included / Vacation up to 500 hours.

Cost of Living Adjustment (COLA) July Benefit Prior to 7/1/2011 = 3% annually After 7/1/2011 = 0% annually Both = computation Years prior to 7/1/2011 / Total years of service Hire date (Aug 1989) = 23 years of service prior to 7/1/2011 7 years after 7/1/2011 30 years total 23/30 = .7666 x 3.0% = 2.29 % COLA

Insurance After Retirement 112.0801 Florida Statutes requires FRS employer to offer you or your eligible dependents the option of continued participation in any employer-sponsored group insurance plans, in which you were participating at your retirement or at DROP termination date Premium cost for health and hospital insurance coverage may not exceed the total employee and employer premium cost applicable to active employees What does that mean? You pay full cost, not subsidized cost You lose eligibility to participate if you choose not to continue Medicare – apply 3 months prior to 65th birthday. If not, late penalty for life.

Health Insurance Subsidy Must be approved annually by Legislature. NOT guaranteed. $5 for every year of service up to 30 years = $150 monthly Minimum is $30 monthly Must have proof of insurance to collect. Must apply for benefit. Taxes must be paid on monies received. Example Health $ 718.00 Dental $ 18.15 Vision $ 5.30 $ 731.45 per month - $150.00 HIS $ 581.45 total cost per month

Re-employment 12 months retired = free & clear to work for an FRS employer If not an FRS employer, you can go to work for them immediately. Contracted Services “Independent Contractor” Services provided to public, private and other entities Officiating Do not jeopardize your retirement!

Social Security Know your full age to retire Reduction in benefits prior to full age Create your account at www.ssa.gov Check your annual statement online. You will need your Social Security card when you retire.

What to do Years 29 & 30 Set up a meeting with Retirement Office Get a meeting with a viable financial planner Budget – Have the hard talk! You will not spend less in retirement! You will spend differently. GOOD LUCK!

12 Documents to Organize Now Will (avoid family arguments) Living Revocable Trust (probate avoidance) Living Will (end of life wishes) Healthcare Power of Attorney (who makes your final medical decisions) Financial Power of Attorney Designate Beneficiary Accounts (beneficiaries need to now) Copy of marriage licenses/ divorce decrees Copy of latest federal tax returns Financial accounts – where is your $ and stuff (usernames/passwords) Letter of Instruction/Intent (tell executor what to do) Funeral Plan Business Succession Plan

Questions?