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Making Sense of Your Annual Retirement Statement

Picture of James Gates, CFP® Investment Advisor Representative of GWN Securities Inc.

Introduction

Every year, members of the Florida Retirement System (FRS) receive an Annual Retirement Statement. This document is designed to give you a snapshot of where you stand in the system and what your future benefits might look like.

But for many members, the statement can feel confusing or overwhelming. Understanding the numbers is critical because it helps you make better decisions about retirement timing, DROP entry, and retirement planning.

What the Annual Statement Includes

Your statement provides an overview of key information such as:

  • Years of Creditable Service: The total time that counts toward your pension.

  • Projected Retirement Date: Based on current eligibility rules for your class (Special Risk, Regular, etc.).

  • Average Final Compensation (AFC): The salary figure used in the pension formula (highest 5 or 8 years, depending on hire date).

  • Multiplier: The percentage applied per year of service (3% for Special Risk, 1.6% for Regular Class, etc.).

  • Projected Monthly Pension Benefit: What you might receive at normal retirement, based on current data.

  • Investment Plan Balance (if applicable): If you’re in or transferred to the Investment Plan, it will show your account balance and contribution history.

  • Health Insurance Subsidy Estimate: How much you may qualify for ($7.50 per year of service, up to $225/month).

How to Read the Projections

It’s important to remember that the statement is a snapshot in time:

  • The projected pension assumes your current salary and service level remain constant.

  • Working longer or earning more in your final years can increase your AFC and pension amount.

  • For members with service both before and after July 1, 2011, the COLA is prorated — so your statement may reflect only a partial adjustment in retirement.

Common Misunderstandings

  1. Thinking it’s a guarantee. The statement is an estimate based on current rules and data — not a final promise.

  2. Overlooking DROP eligibility. The statement may show your retirement date but not always emphasize how DROP timing affects your payout.

  3. Ignoring survivor options. The benefit shown is typically the Option 1 “maximum benefit” — actual payouts may be lower if you choose a survivor option.

  4. Confusing vesting with retirement eligibility. Being vested means you qualify for a benefit, but it doesn’t mean you can retire yet.

How to Use Your Statement Effectively

  • Track Progress: Compare this year’s statement to last year’s to see how your projected benefit is growing.

  • Verify Accuracy: Double-check that your years of service and salary history are correct.

  • Plan Ahead: Use the numbers to project how much income your pension may provide alongside DROP, IRAs, or other savings.

  • Ask Questions: If anything looks unclear, contact the FRS Division of Retirement or a qualified advisor for clarification.

Final Thoughts

Your Annual Retirement Statement is more than just paperwork — it’s a valuable planning tool. By learning how to read it carefully, you can gain insight into your progress, spot errors early, and make informed decisions about your FRS retirement options.

The sooner you understand your statement, the better prepared you’ll be for retirement.