We specialize in servicing members retiring from the Florida Retirement System. Our #1 goal is education!
You need to know how FRS works, what to do about DROP and when, the appropriate forms you will need, how to deal with your defined benefits (Sick Pay and Leave), your Health Insurance Subsidy and figuring out Medicare and Social Security.
Our clients agree, we strive to arm you with the knowledge you need to make informed choices and help you manage the abundance of information you are receiving so that it all makes sense with your goals and dreams.
Follow this link to check out a list of FAQs – FRS Frequently Asked Questions
*This information is not approved nor endorsed by the Florida Retirement System or Division of Retirement. Access Advisors is not directly affiliated or associated with the Florida Retirement System or the Division of Retirement.
The financial cost of longevity risk is that individuals will either outlive their retirement savings or alternatively, they will underspend their savings, leading to a lower income over retirement and an unintentional bequest on death. Depending on how you saved during your working years will determine how we create a plan to answer the three main questions below.
Underestimation: Longer life expectancies lead to increased longevity risk; the impact of this is arguably exacerbated by the fact that people frequently underestimate their life expectancy and potential variability in actual lifespan.
Uncertainty: As noted previously, we continue to see mortality improvements and life expectancy determinations do not always take into account future changes in mortality rates. Programs such as Social Security systems, life insurance annuity products and defined benefit pension plans can pool longevity risk over a large number of individuals.
Looking at an average life expectancy can provide reasonably accurate and consistent results. However, longevity risk for an individual is much more uncertain. The individual who retires at age 65 may have a life expectancy of 85 but has some chance of dying at age 70 or living to age 100. For this reason, self-insuring longevity risk carries a significant cost.
Range of responses: People face an often daunting prospect of navigating a complex range of possible investment and spending decisions, when they come to retire and after retirement. It is therefore useful if a default option exists that can provide people with an appropriate level of protection against longevity risk over the course of their retirement. Access Advisors will be your partner in determining how to answer these questions and build a plan to accomplish your objectives.
Wealth Transfer is the transfer of wealth or assets to beneficiaries upon the death of the owner through financial planning strategies that often include wills, estate planning, life insurance, or trusts in a tax efficient manner. Planning to leave your legacy to your heirs (including charity) can be complex and difficult to face. There is no easy way to say it—anticipating your death is an uncomfortable topic.
The issues that need to be confronted are far easier to avoid than to address. Yet effective wealth transfer planning may lessen the likelihood of family conflict, preserve wealth, reduce estate costs, and reduce taxes.
When considering wealth transfer, most Americans want to know that no matter the size of their estate, their assets will move to the people they choose at the lowest possible rate of taxation and at the highest rate of interest earned throughout the life of the products they have purchased, with little or no risk. One of the biggest lessons we teach at Access is “Don’t let perfect be the enemy of good” The old adage “don’t let perfect be the enemy of good” applies to all planning—your wealth transfer plan included.
Your wealth transfer plan, like every other plan, anticipates the probability of future events in the face of imperfect knowledge. Consequently, it will never be perfect—it will always remain a work in progress requiring periodic updates as anticipated events occur (or not), as market and regulatory developments occur (or not), and as new planning considerations arise (or not). For your part, retaining an advisory team to help you select from the sheer variety of effective planning considerations and to navigate you through the wealth transfer planning process is essential. You should work with your advisors to articulate your current wealth transfer planning goals.
Although your goals may evolve over time, the goals you identify today will serve as the foundation that guides the planning steps you choose to implement. Our process starts with 4 simple questions as the basis for your plan:
What is important to you? Needs, Aspirations, Goals.
How do you plan? Risk tolerance, Tax approach, Asset protection
How will you distribute wealth? To whom, when, and under what circumstances
How do you stay in check? Access Advisors helps you stay ahead of market and regulatory changes
SOCIAL SECURITY MAXIMIZATION
Considering that Social Security accounts for 40% of the average retirement income, you must spend time understanding how it operates. It’s one of the most valuable resources of retirement. The decision on when and how to file is one of the most important financial decisions clients make in their lifetimes.
Here’s a quick rundown of the major benefits of Social Security:
Regular income that increases over time
Continues as long as you live
Increases with inflation
Eliminates investment risk
Most retirees trigger their benefits at one of three ages:
Age 62 (the earliest retirement age)
Age 66, or their Full Retirement (the year of “Full Retirement” age for those born between 1943 and 1959)
Age 70 (the age at which monthly benefits max out)
Unfortunately, in nearly every circumstance, none of these three ages will actually get them their maximum lifetime benefit.
There are 567 different ways married couples can claim their benefits. The difference in timing and strategies used can result in more than a 75% reduction in lifetime payments you should receive.
Taking Social Security early can permanently reduce your benefits by 25% and affect the benefit your spouse receives after you pass away.
If you start Social Security early and continue to earn a wage income, your benefits may be even further reduced!
For every $2 you earn above a certain threshold, income taxes will take $1 of your Social Security benefit away. What we find in meeting with so many individuals about social security is that questions are confined to these key points:
COLLECT NOW OR LATER This is one of the most important decisions you will ever make when it comes to Social Security. What year is best for you to begin collecting social security benefits.
SPOUSAL BENEFIT PLANNING What options does my spouse have and am I choosing the one that will provide the most income?
SURVIVORS BENEFITS If I pass away, how much income will my spouse get, and how can I fill their income gaps?
IMPACT OF WORKING IN RETIREMENT If I make additional income during retirement, how is it going to affect my Social Security benefit?
SOCIAL SECURITY TAXATION How much of your Social Security will be taxed, and what you can do to lower taxation.
FILLING THE INCOME GAP Social Security replaces only about 40 percent of the average American’s income after retiring*. That still leaves a substantial gap for most families to fill in order to live comfortably in their retirement years. Filling the Income Gap shows how much of your retirement nest egg you need to provide the additional income you are looking for in retirement.
Wherever you fit above, we will create a customized plan that is built for life.
Key Terms of Social Security Planning
Primary Insurance Amount (PIA): The Primary Insurance Amount (PIA) is the benefit a person would receive if he/she elects to begin receiving retirement benefits at his/her Full Retirement Age (FRA). At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.
Full Retirement Age (FRA): This is the age at which you are eligible to receive your full retirement benefit, currently between age 66 and 67. If you were born in 1944 or earlier, you are already eligible for your full Social Security benefit. If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67.
Delayed Retirement Credits (DRC): Your benefit will increase automatically by a certain percentage from the time you reach your FRA until you start receiving your benefits, or until you reach age 70. Social Security will add 8 percent per year to your benefit for each year that you delay receiving your benefit beyond your full retirement age.
Benefits for Widows & Widowers: If you are the widow or widower of a person who worked long enough under Social Security, you can receive full benefits at full retirement age for survivor or reduced benefits as early as age 60. Once you receive survivor benefits, you can switch to your own retirement benefit as early as age 62. In many cases, a widow or widower can begin receiving one benefit at a reduced rate and then, at full retirement age, switch to the other benefit at an unreduced rate. If you remarry, after you reach age 60, your remarriage will not affect your eligibility for survivor benefits.
Spousal Benefits: If the spouse of a working begins to receive benefits at his/her FRA, the spouse will receive 50 percent of the primary’s primary insurance amount. If the spouse begins collecting benefits before FRA, the amount of the spouse’s benefit is reduced by a percentage based on the number of months before he/she reaches FRA.
Ex-Spousal Benefits: Ex-spouses may be eligible to receive Social Security benefits based on their former spouse’s work record. If they were married for at least 10 years, the ex- spouse may be entitled to full spousal and survivors’ benefits. A divorced spouse is entitled to 50 percent of their ex-spouse’s benefit at their FRA. If the couple is divorced before the worker turns 62, the divorced spouse must wait at least two years before he or she can receive benefits on the ex-spouse’s work record. However, if the worker has already started taking benefits, the divorced spouse can apply for benefits right away. If the worker wants to continue working but the ex-spouse wants to collect benefits, they do not have to wait until the worker stops working, so long as the ex-spouse is at least 62 years old. Spousal benefits end when the worker dies, but the ex-spouse may then be entitled to survivors’ benefits.
File & Suspend: To apply the “File and Suspend” strategy, a spouse files for their own benefit at (FRA) and then immediately requests to suspend payment. This will do two things, it will allow the suspended benefit to earn DRCs and it will enable the spouse to claim a spousal benefit. In the future, you can choose to begin taking your own benefit, but at a higher, rolled-up amount.
Restricted Application: If you are currently married, you have attained FRA and your spouse has already filed for their own benefit, you can apply for a spousal benefit and delay taking your own benefit until age 70. This strategy allows you to claim a spousal benefit now, and claim a higher retirement benefit later by allowing your benefit to earn DRCs. Filing for any benefit prior to your FRA will cause a reduction in benefit amount
Paying Taxes on your Benefits: About 40 percent of all people receiving Social Security benefits have to pay taxes on their benefits. You will have to pay taxes on your benefits if you file a federal tax return as an “individual,” and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income that is more than $32,000.
Annual Earnings Limit: If you are younger than FRA, there is a limit to how much you can earn and still receive all your Social Security benefits. If you are younger than FRA, $1 in benefits will be deducted for each $2 in earnings you have above the annual limit ($15,720 in 2015). In the year you reach your FRA, your benefits will be reduced $1 for every $3 you earn over a different limit ($41,880 in 2015) until the month you reach FRA.
Windfall Elimination Provision: If you work for an employer who does not withhold Social Security taxes from your salary, such as a government agency or an employer in another country, the pension you get based on that work may reduce your Social Security benefits. The Windfall Elimination Provision (WEP) affects how the amount of your retirement or disability benefit is calculated if you receive a pension from work where Social Security taxes were not taken out of your pay. A modified formula is used to calculate your benefit amount, resulting in a lower Social Security benefit than you otherwise would receive. If you paid Social Security tax on 30 years of substantial earnings you are not affected by the Windfall Elimination Provision. If you get a relatively low pension, you are protected. The reduction in your Social Security benefit cannot be more than one-half of the amount of your pension. The maximum monthly amount your benefit may be reduced because of the WEP is currently $408 for someone reaching age 62 in 2014 and having less than 20 year of Substantial Earnings.
Government Pension Offset: If you receive a pension from a federal, state or local government based on work where you did not pay Social Security taxes, your Social Security spouse’s or widow’s or widower’s benefits may be reduced. Your Social Security benefits will be reduced by two-thirds of your government pension. In other words, if you get a monthly civil service pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits. For example, if you are eligible for a $500 spouse’s, widow’s or widower’s benefit from Social Security, you will receive $100 per month from Social Security ($500 – $400 = $100). If you take your government pension annuity in a lump sum, Social Security still will calculate the reduction as if you chose to get monthly benefit payments from your government work.
Disability Benefits: Social Security pays benefits to people who cannot work because they have a medical condition that is expected to last at least one year or result in death. The amount of the disability benefit is the same as a full, unreduced retirement benefit. When you reach full retirement age, your benefits are automatically converted to retirement benefits. Certain family members of disabled workers also can receive money from Social Security. They include: Your spouse, if he or she is age 62 or older; your spouse, at any age if he or she is caring for a child of yours who is younger than age 16, or your child younger than age 18 or younger than 19 if in school.