What's the retirement look like in Florida?
Jan 06, 2025Make sure you guys are planning for retirement and understand the Voodoo math of FRS
Under the Florida Retirement System (FRS), police officers are eligible for retirement benefits after completing 25 years of service or reaching age 55 with at least 8 years of service. The FRS is a defined benefit plan, meaning that retirement benefits are calculated based on a formula that takes into account years of service, salary, and a multiplier.
To vest in the FRS, an employee must complete 8 years of creditable service. The employee's contributions to the plan are based on a percentage of their salary, with the current rate set at 3% for regular class employees.
To calculate retirement benefits under the FRS, the average of the employee's highest 5 years of salary is multiplied by a percentage based on years of service and the chosen retirement option. For example, if a police officer retires after 25 years of service with a top three year salary of $60,000, and they choose the single life annuity option, their retirement benefit would be calculated as follows:
25 years of service x 3% multiplier = 75%
Average of highest 5 years of salary: ($60,000 + $60,000 + $60,000 + $55,000 + $50,000) / 5 = $57,000
Retirement benefit: $57,000 x 75% = $42,750 per year
It's important to note that retirement benefits under the FRS are subject to change based on legislative action, and the FRS also offers other retirement options such as the investment plan and the cash balance plan. It's recommended that individuals consult with a financial advisor to determine the best retirement option for their individual needs.
I personally would always consider padding these numbers with a a Roth IRA. This is not a personal finance channel, but the facts show that the average car payment in America invested into a Roth will max out the benefit that currently stands at $7500 a year.
With the power of compound interest these numbers start to make the difference between eating Alpo or ordering the menu. Obviously, Do your own research and know this is not financial advice, but it is what I am doing.
Invest a car payment for 20-30 years and enjoy a bucket of security! I personally use Vanguard and love VTSAX
If you need help with the Statewide Officer Certification Exam visit us over at SOCEPREP.com for more info and resources. Thanks for your service!
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