By Keith W. Young, DROP Advisory Council Chairman
Retiring from FRS can be complicated and stressful. The paperwork can be overwhelming. There many decisions you will need to make before retiring including, “What to do with your DROP money? When should you take Social Security? How do you invest and spend down assets in retirement? What paperwork is critical?”
Here are several helpful tips to help you get retirement ready.
- Golden Envelope: Three months before you retire, you should receive the envelope from the Division of Retirement. Make copies of all the paperwork (DROP termination form, DROP allocation forms, and Direct Deposit form). Several forms must be notarized.
- Direct Deposit form: Complete this online
- Sign up for Medicare B: If you are 65 years and older, sign up for Medicare B three months before you retire
- Sign up for a Medicare Supplement/Medicare D or Medicare Advantage Plan: You must first have your Medicare A&B card to be eligible for a plan.
- When to start taking your Social Security: You need to understand your full-retirement age and the penalty if you take it too soon.
- Save your DROP money from taxes: Roll your DROP money into an appropriate IRA or qualified plan based on your risk tolerance and timeframe. You may want to use several IRAs that offer fixed, guaranteed interest rates. You can open a liquid IRA and others for long-term growth and income. Several IRAs are short-term and can provide exceptional interest rates.
- Pension check should arrive in 30 days: Look for your FRS pension check 3o days after your retirement date. If it is late, contact the Division of Retirement to see if there is a problem.
- New W-4 Withholding Form: Complete this form so that the State of Florida can withhold the correct federal income tax from your pay. Your first check will have five allowances, married with three children. If you do not charge this, you will have a large tax bill at the end of the year. You will want to mark your withholding allowance either 0 or 1, depending on your situation.
- Health Insurance Subsidy Form: You will need to fill out this form to get the subsidy from the State of Florida. You will receive $5 for every year you worked (subtract your DROP years). If you do not fill it out, you will not get it.
To learn more about several other critical decisions you need to make, please contact the DROP Advisory Council or click on the link below for more information.
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