Saving for retirement is a big issue for the 55+ crowd. There are, of course, many individual factors to consider when calculating how much money you'll need to retire in the manner you want, and that's not really something we're qualified to give advice on. Consult a professional financial planner to talk about what you need and how to get there.
We do, however, want to make sure you take into account common unexpected expenses in retirement, and we've also written a little about how to decide when it's the right time to retire. And we'd also like to just introduce you briefly to MyFRS, the Florida Retirement System, which is in many cases a convenient option for saving toward your retirement.
About MyFRS
The Florida Retirement System offers employees a way to save for retirement, particularly if their employer doesn't offer a 401(k) or its own pension. It's not necessarily right for everyone, and again, that's something to discuss with your financial advisor. Still, it's important to know your options—especially if you don't realize you have them.
MyFRS has two different plans: the MyFRS Investment Plan and the MyFRS Pension Plan. With either, you make a mandatory contribution of 3% pretax, while your employer (who has to opt in) contributes a little more than half of the money put into your retirement account. Employer contributions are determined as a fixed percentage of your gross salary.
Comparing and Contrasting the MyFRS Plans
Here's a quick look at some of the big differences between the two plans to help get a better idea which would be the more appropriate for you.
The MyFRS Investment Plan, a 401(k)-style investment program, is geared towards employees who don't foresee being with their current employer for a long stretch of time. You qualify for benefits after only one year of service. On the other hand, the MyFRS Pension Plan, which is basically a traditional pension plan, is for the long-term employee, with benefits only kicking in after 8 years of service.
If you opt for the MyFRS Investment Plan, your employer contributes 3.3% of your monthly salary, while the Florida State Legislature dictates the contribution from your employer with the Pension Plan. However, your contributions and your employer's are both subject to change by the State Legislature with either plan.
With the Investment Plan, you choose from various options for how your retirement savings are invested. Alternatively, the State Board of Administration directs your money with the MyFRS Pension Plan.
Also, it's important to consider how you want to receive your money when you retire. With the MyFRS Investment Plan, you can choose a total payout, lifetime monthly checks, or to roll the account over into another retirement account. If you have the Pension Plan, you receive monthly checks.
For More Information
If you'd like more information about MyFRS and saving towards your retirement through the Florida Retirement System, visit the website here.
