When Florida Retirement System (FRS) participants begin planning for retirement — whether through the Deferred Retirement Option Program (DROP) or a traditional retirement path — one of the most important decisions they’ll make is choosing a pension payout option. This choice directly affects your retirement income, the financial protection available for your loved ones, and the way your benefits fit into your overall retirement strategy. 

With four primary FRS pension options explained below, understanding how each one works can help you choose the plan that aligns best with your personal financial goals, family needs, and long-term vision for retirement. 

The Four FRS Pension Options Explained 

Option 1: Maximum Monthly Benefit 

This option provides the highest monthly pension payment for your lifetime. However, there are no survivor benefits after your passing. 

Who Might Choose This Option: 

• Single participants with no dependents. 

• Participants with sufficient life insurance or personal savings to provide for heirs. 

• Couples where the spouse has their own independent retirement income. 

Key Considerations: 

• No benefits continue for a surviving spouse or beneficiaries. 

• Works best if providing for others is not a primary concern. 

Option 2: 10-Year Certain Benefit 

This option provides a slightly reduced monthly pension payment compared to Option 1. However, if you pass away within 10 years of retirement, your designated beneficiary receives the same monthly benefit for the remainder of the 10-year period. 

Who Might Choose This Option: 

• Participants with a spouse or family member who may need financial support but not a lifetime benefit. 

• Those looking to balance current income with limited survivor protection. 

Key Considerations: 

• After 10 years, the benefit stops entirely, even if the beneficiary is still living. 

• May be appealing if you expect other income sources to cover your spouse’s or heirs’ future needs. 

Option 3: Joint and Survivor Benefit 

This option provides a reduced monthly benefit during your lifetime, but your surviving joint annuitant (usually a spouse) receives the same benefit for their lifetime after your passing. 

Who Might Choose This Option: 

• Married participants whose spouse relies on this income for retirement. 

• Those prioritizing ongoing financial protection for a surviving spouse. 

Key Considerations: 

• The monthly benefit is reduced to account for the lifetime survivor benefit. 

• Survivor benefits only apply to your named joint annuitant (you cannot change this after retirement). 

 

Option 4: Reduced Benefit with Two-Thirds Survivor Benefit 

This option provides a reduced monthly benefit during your lifetime. Upon your passing, your joint annuitant receives two-thirds of the monthly benefit for the rest of their life. 

Who Might Choose This Option: 

• Married participants who want to provide for a spouse but are comfortable with a reduced survivor benefit. 

• Couples who expect to rely on a combination of pension, Social Security, and savings. 

Key Considerations: 

• Provides less for your spouse than Option 3, but a higher monthly benefit for you. 

• Survivor benefits only apply to your named joint annuitant. 

Factors to Consider When Choosing Your FRS Pension Option 

1. Your Family and Beneficiary Needs 

If your spouse or dependents rely on your income, choosing a survivor benefit option may provide the ongoing support they need. If you’re single or your spouse has their own retirement income, a higher monthly benefit during your lifetime may make more sense. 

2. Your Health and Life Expectancy 

Participants who expect a longer retirement may want to be sure their spouse or joint annuitant has financial support for decades. Conversely, those with health concerns might prioritize short-term income. 

3. Spouse’s Age and Financial Status 

If your spouse is younger and plans to outlive you by many years, selecting a joint and survivor benefit may offer important long-term protection. If your spouse has their own pension or savings, you may prefer the higher benefit of Option 1. 

4. Other Retirement Income Sources 

Consider how your pension fits into your overall retirement income plan. If you have significant savings, investments, or Social Security benefits, you may feel comfortable with a higher benefit during your lifetime. If your pension is the primary income source, ensuring your spouse has reliable survivor income may be more important. 

How Your Pension Choice Fits with DROP Participation 

For participants enrolling in the Deferred Retirement Option Program (DROP), the pension option you choose at DROP entry locks in your monthly benefit amount. The choice also determines what happens to your benefits if you pass away during DROP participation. 

During DROP: 

• Pension benefits accumulate in your DROP account, earning interest. 

• If you pass away while in DROP, the survivor benefit option you selected determines what, if any, ongoing payments your beneficiary receives. 

After DROP: 

• Monthly pension payments begin directly to you, following the terms of the pension option you selected. 

• Survivor benefits, if applicable, continue after your passing based on your original pension choice. 

Why Reviewing Your Choice Matters 

Once you select your pension option, it cannot be changed after retirement begins. This makes it essential to carefully review your family’s needs, financial goals, and overall retirement picture before making a decision. Consulting with both your spouse and a financial professional can help you evaluate your options and select the plan that fits your life best. 

How BENCOR Helps with Pension Option Decisions 

BENCOR works with FRS participants to help them understand how each pension option fits into their broader retirement and estate plans. Whether you’re entering DROP or preparing for a traditional retirement, BENCOR offers guidance to help you: 

• Review how each pension option affects your retirement income. 

• Align your pension choice with your spouse’s needs and estate goals. 

• Coordinate your pension with DROP benefits, Social Security, and other income sources. 

With nearly 30 years of experience serving FRS participants, BENCOR can help you make a pension choice that supports your financial future and provides for your loved ones. 

 Final Thoughts on Choosing the Right Pension Option 

Choosing the right FRS pension option is a key step in preparing for retirement. By understanding the pros and cons of each choice and aligning your selection with your family’s needs and long-term goals, you can make an informed decision that supports your retirement vision. 

If you’re ready to explore your pension options or want to understand how they fit into your DROP or retirement plan, we can help. For personalized advice and in-depth planning, please schedule a free consultation with our team at BENCOR DROP support. We look forward to speaking with you!