In Florida, it’s not uncommon for both spouses in a household to be members of the Florida Retirement System (FRS). Dual FRS households face unique planning opportunities and challenges. Coordinating these benefits can lead to more efficient income strategies, better survivor planning, and a smoother retirement transition.
Here are several key considerations for couples navigating FRS retirement together.
When both spouses are eligible to retire around the same time, it’s worth looking at how their combined choices affect cash flow, insurance coverage, and lifestyle preferences.
Things to think about:
Should one spouse enter DROP while the other keeps accumulating pension credits?
Will staggering retirement dates help maintain consistent health insurance coverage or income?
Are there financial advantages to overlapping DROP periods to accumulate savings more quickly?
If both spouses are eligible for a pension, deciding whether to select Option 1 (maximum benefit, no survivor income) or Option 3 (reduced benefit with a lifetime survivor payout) becomes a more nuanced discussion.
Key questions:
Which spouse has the higher benefit, and would it make sense to preserve that income for the other?
Are both spouses in similar health, or should one plan for the other’s long-term needs?
Would a combination of Option 1 and personal life insurance provide more flexibility than taking Option 3?
If one or both spouses are eligible for DROP, or in the investment plan, the decisions around how and when to exit, and what to do with DROP funds, should be coordinated.
Considerations:
Will one spouse use DROP funds to bridge to Social Security while the other delays claiming?
Are both using the FRS Investment Plan, and if so, is there overlap or diversification in their allocations?
Does it make sense for one spouse to stay conservative while the other takes on more investment risk?
Retiring at different times may impact access to employer health insurance or COBRA coverage. Couples should evaluate:
Whether one spouse’s plan can cover both retirees.
How to plan for healthcare costs if retiring before Medicare eligibility.
Using the Health Insurance Subsidy (HIS) benefit from both plans to help offset premiums.
Dual FRS households may have more complex estate planning needs. Consider:
How pension benefits transfer in the event of a spouse’s passing.
Whether survivor options align with estate planning goals.
If both or either spouse has investment plan balances, are beneficiaries up to date and coordinated?
FRS couples have a powerful opportunity to create a coordinated retirement strategy that aligns with their shared goals and financial needs. While it’s easy to focus on each plan separately, stepping back to view the full household picture can uncover options that might offer more flexibility, stability, and long-term value.
For many couples, working with a financial professional familiar with FRS can help clarify the trade-offs and optimize decisions across pension options, DROP, healthcare, and estate planning.