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hey you guys thank you so much for joining with us today we're gonna be going over this topic of fr-s the Florida Retirement System because unfortunately over the last couple weeks we've been getting many many families worried about their pensions worried about their accounts or the state and through the county so we're gonna be going over that today because due to this whole virus there are many many families that are worried about everything that's been going on with the overall economy my name is sebastian guerra i'm a financial advisor i Garifuna an shal group and we hold over a hundred of physical events on the topic of the florida retirement system throughout the entire year and because of this we've had to cancel all of our events for the next thirty to sixty days but the good news is that we're bringing this information live straight to your home straight to your bedroom so you can grab this information and you know exactly what to be doing in regards to your money and your retirement there are many cut there are many people that I work for the county that work for the state there are worried about their accounts so that's the purpose of today's video is just that you understand exactly of what's gonna eventually happen with those accounts and how to react to it alright so the first thing we need to understand is what is the Florida Retirement System the Florida Retirement System is a retirement pension structure around the state of Florida so if you work for the county you work for the state more than likely you are going to be eligible for something called the Florida Retirement System pension so this is the way it works everyone that started working for the county they're going to have by default they are going to be enrolled in something called the FRS pension and what that means is that if you finished off working 20 years 30 years you're eventually gonna be eligible in getting a monthly pension for the rest of your life there are some that can even start getting it after six years even after eight years so it all depends on when you were hired and stuff like that so everyone is eligible in collecting what's called the Florida Retirement System pension as long as they've invested now whenever a person is going to be getting their pension that pension is gonna be a monthly check that you're going to be receiving for the rest of your life so there are some people that get this pension check as early literally in their 30s and 40s depending on how early they began to work but most people are going to be getting a monthly check for the rest of their life from the state of Florida from the Florida Retirement System now everyone that is enrolled in the pension usually when they are ready to retire they are going to have four options that they are going to have to make a decision on and they have to decide which of the four options they want what they want to take so usually option one what they end up telling you is the end up saying something like this we're gonna give you a monthly pension for the rest of your life but it's a certain fixed number that will not change for the rest of your life except based on inflation so they might put put a small increase on it on a regular basis that's a call to Cola but now what is important is the following that that pension is only going to last only for the rest of your life it is not going to last for the rest of you and your spouse's life so for example let's say that the check was going to be three thousand dollars a month you retire and two months later you pass away if two months later you pass away and you're married your husband your wife your spouse will not be getting the $3,000 any more for the rest of their life so this is a check that's an option that you choose usually for people that are single usually if you're single or you don't care about leaving your spouse anything you'll usually go with option number one now option number two is a little bit different option number two this is what they say if you choose option two they are going to give you a pension every month for the rest of your life but they have something called a 10-year period of certain and this is what that means what that means is that when you go and eventually hypothetically three years into retirement you pass away then there's only seven more years that your beneficiary will get a monthly check for the rest of that 10-year period so what do I mean by that let's say that instead of three thousand a month they will end up giving you probably about a five or maybe a ten percent reduction on whatever your pension is so instead of three thousand let's just call it twenty eight hundred so let's say that you retired you start getting your twenty eight hundred dollar check and you pass away three years right after you retire that means your beneficiary whoever you assign on option two will end up getting every single month $2,800 a month but only until the ten years are up so have you been three years in retirement that means your beneficiary would only get the $2,800 a month for another seven years that's called the ten year period certain right so that is the amount of money that you will end up getting only for that but you're gonna get that money for the rest of your life but your beneficiary if you pass away during the first ten years your beneficiary will only get that money until the ten years are up now you can also go with option three now option three is usually the choice that people make that are married usually that's the choice that will your end up so will you end up saying is you're gonna get $3,000 a month but you see an option three it won't be $3,000 a month it might be even a larger reduction it might be 20 maybe even 30 maybe even a 40% reduction on your check so instead of 3,000 let's just say that the amount of money is 2,400 so instead of $3,000 a month you're gonna get a $600 reduction now what's the benefit the benefit is that if you pass away at any point in time whether a year later five years later ten years later 20 years later your spouse will continue to get $2,400 per month for the rest of his or her life so they won't end up getting that for the rest of their life so usually a lot of married couples end up taking and making this choice now what is important is you cannot add a child on option 3 it could only be your spouse okay now option 4 is a little bit different option 4 might be a little bit higher than so instead of 2400 it might be 2600 but the difference is the following if either of the two pass away whether you that work for the county or your spouse passes away whenever either of the two possibly the remaining spouse will get a one-third reduction on check so instead of getting $2,600 a month the remaining spouse might only end up getting a check for maybe $1,600 per month so there is gonna be about a 33% reduction on the check for having gone with option four so option four gives you a little bit more money but if you pass away or your spouse passes away then your remaining spouse will end up getting a 33 percent reduction in other words a one-third reduction on the pension so that's the way the normal FRS pension works now a lot of people have always asked me Sebastian what if I wanted to enroll in something called the drop right so maybe you've heard of the drop and this is I think it's a very big confusion that a lot of people have because many people don't understand how the drop works so this is the basic understanding of the drop the drop is once you enroll in the drop you are technically retiring what that means is you are already submitting your paperwork saying that you are going to retire but you're gonna keep your job so what that means is you're gonna keep making your normal income your normal salary that's not going to change but what they're gonna do is they're gonna retire you when you retire you have to make your choice whether you want option 1 2 3 or 4 they're gonna grab your pension and what they're going to do is they're going to begin to save your pension on a monthly basis inside an account for you and they will save that money up to the normal time period is up to a 5 year period so what they're gonna do is they're gonna grab your 3,000 a month which is $36,000 a year and they are going to begin to pile this money up inside this account and at the end of the 5 years they are going to give you this money once you're ready to walk out but the beauty is this when you enroll in the drop you are going to get this big bucket of money so it's a it's literally like a retirement account that you can go and roll over into an IRA or maybe your deferred comp or different types of accounts and not only that but you will also continue to get your pension of let's just call it if you chose option 1 you you will continue to get your pension of three thousand dollars every single month for the rest of your life so the beauty is you're gonna get a drooler a lump sum and you're also gonna be getting a pension but again the drop is not for everyone so that's why they created something that's called the investment plan now I'm gonna be really honest with you the investment plan is an account or it's an option that's not for everyone the investment plan is typically what they call like a 401k so you have the option when you retire you have the option of getting your FRS Pension Plan and converting it to something called the investment plan now what does that mean that means you are going to forfeit your entire pension and by the way if you're in the drop you cannot move into the investment plan you could only move to the investment plan if you're still in the pension plan so if you're already in drop that's it it is what it is you're already in drop if you're still in the pension plan you have the choice of getting out of the pension straight into the investment plan now this is what that means what's gonna happen is the following they're gonna grab your pension plan and they're gonna you're gonna have to forfeit it so you will not get a pension any more the rest of your life but what is going to happen is that they're gonna give you a big giant bucket of money what do you retire this big giant bucket of money can range anywhere between 15 and 20 times whatever your pension is so there's a very interesting calculation I recommend you to go to the FRS website it's called my FRS com you should request a pin you should log in and you should calculate and figure out if you wanted to convert to the investment plan how much money would that be how much is that giant bucket of money because usually that giant bucket of money is 15 to 20 times whatever the annual pension is so if the annual pension is thirty six thousand a year this big giant bucket of money can probably be five six hundred thousand dollars but again you have to go to the Maya 4s website and find out exactly how much money that is now you're thinking Sebastian so which one is the best choice so that I go into the pension should I enroll in the drop or should I move over to the investment plan you see and this is a decision that it's not a blanket statement we cannot say that everyone should make one of the choices but I'll put it to you this way right so what if you had what if you were not married and you ended up passing away two years into retirement but you did have three children that you wanted to leave your money so if you chose the pension option you would get the $3,000 a month while you were retired but when you pass away the entire state of Florida ends up keeping your entire pension so your pension is not inheritable in other words in the investment plan at least your investment plan is inheritable to your family so with the reason I'm bringing this up it's not to say that the investment plan is better why because the investment plan requires a lot of knowledge you need to understand how to structure the investment plan again this is like a 401k it's like a 403b it's like a 457 this is an account that you need to know how to allocate it how to structure it you need to have an advisor that's guiding you in how to structure this but again you need to understand the difference between each one and which one is the right decision for you but now to answer the question that a lot of people have should I be worried about losing my money due to what's been happening with the virus the answer is you do not need to worry about that why because the state of Florida is extremely in stream lis strong in the area of the pension so you do not need to worry about that but again you are relying on the pension and thus and how solid the state of Florida Pension Fund is on obviously the next 20 30 40 years of your retirement now if you're inside the investment plan you do need to be aware of everything that's been going on in the economy because your investment plan more than likely has taken a massive hit over the last couple weeks the last couple months so what's really important is that you speak to a financial adviser that's knowledgeable in the area of the Florida Retirement System unfortunately there are many financial advisors out there that do not have the knowledge they consider the sums up themselves financial advisors but they do not have the knowledge on the area of the Florida retirement system when a person is retiring from the state of Florida there are so many complicated rules and you making one bad decision can end up costing you thousands and if not hundreds of thousands of dollars the rest of your life so do not make this mistake thank you so much for listening to this information I really hope that you enjoy this content you know we are going through right now a very difficult time due to this whole virus due to this whole Cove in nineteen and the stress that this has brought on people's finances and their retirement you see I know that right now we went over the topic of fr-s and the pension plan and how it works and how this could potentially impact you and your retirement but the reality is that it doesn't matter how much you learn it doesn't matter how many videos you watch it doesn't even matter how many audios you listen to if you are not grabbing the information the content and taking action on it and making the right decisions on it it really doesn't even matter so with that said we are deciding to right now because of everything that's been going on we've decided to do something free for the entire community we've decided to offer a completely free fr-s analysis we normally charged 300 dollars for this but because of everything that's been going on everything that's been going on with the economy a lot of people are stressed out we are offering this free custom fr-s analysis which is going to tell you exactly the best decision for you to make in regards to your FRS just because you just learned information about the FRS that doesn't mean that you know the best choice for you so we've created a complete calculator designed for FRS employees so if you are a county employee a state employee please click on the link below set up your free phone 15 minute phone consultation with me and my team we're gladly gonna help you on structuring your FRS and you make the right decisions with your FRS if you are invested in the investment plan right now please you more than anyone else are right now suffering because of the market downturn if you are not in the FRS investment plan and you are in the pension plan or in the drop please give us a call set up your phone consultation because this is going to be a very very big decision eventually when you retire your drop money is eventually gonna have to go into an IRA if you don't have the IRA set up if you don't have the retirement account set up you are going to have a very big tax problem later on when you finish your whole drop of the five years so please do not make the mistake that a lot of people make that they wait until the last minute take advantage of the fact that a lot of people are right now staying home maybe right now you're staying home and just pay attention to your money your money right now is a very important factor in everything that's going on in the economy a lot of people are thinking that it's all about health and that's the only thing th t matters but people's economy are getting drastically hit with everything that's been going on click on the link below set up your free 15 minute consultation with me and my team will gladly be helping you on making the right decision with your FRS unfortunately the state of Florida does not help you in the same way that we do we are designed retirement advisors that's what we do we help families make better decisions with their money and that's all we do we look at the whole picture and then we tell you what is the best decision for you to make as a family with that said I hope to talk to you soon