People ask me what DROP is all of the time. Everyone hears about DROP and there is always much...
Are You Ready for DROP?
Almost weekly we have a conversation with someone who for one reason or another has realized they would rather switch to the FRS Investment Plan than retire on the pension plan with the same problem: They are already in DROP. Once a member goes into DROP, they are making a permanent decision to not only retire on the pension plan, but also to retire by a specific date. This happens because many members don't take the time to evaluate all of their options before choosing to enter DROP. Going into DROP locks in your FRS retirement plan, so before making that decision here are four things you should evaluate.
1. What will your DROP benefit be if you decide to go into DROP?
2. What would your pension benefit be if you decided not to go into DROP, and retire in the same timeline?
3. What would be your investment plan balance if you switched to the investment plan instead of retiring on the FRS pension plan?
4. Are you confident that you will be ready to retire at the end of DROP?
If you don't know the answer to these 4 questions before you go into DROP, you may not be fully prepared to be in DROP. We are in no way saying that DROP isn't a good choice, or that you should avoid it, but like any good decisions making process entails, you should know, understand, and compare all of your options before making a permanent choice.
DROP is a great program, but so is having a larger pension with the freedom to choose when you retire. Likewise so is the Investment Plan for giving more flexibility of income and beneficiary protection in retirement. Don't fall into the shoes of so many we've seen in the past who made choices without all of the information. If you have questions about what FRS retirement path is appropriate for you, let us know and we would be happy to help answer any questions you have.