Keys to Retirement Planning and Investing

Where will you get it?
Example: If you're in your early 40s, you won't be able to receive unreduced Social Security benefits until age 67.
You should have the following THREE primary sources of income to pay for your retirement:
  • ONE — Social Security. Social Security should replace 25% to 60% of your pre-retirement income. The higher your income, the less Social Security will replace. Also, the age at which you can receive unreduced benefits has been increasing.
  • TWO — Your Retirement Plan. The amount of your FRS retirement benefit is determined mostly by which plan you belong to, your membership class, how long you remain with an FRS employer and how close to retirement you are when you leave the FRS.
  • THREE — Outside Savings. Any savings you've built up from other employers' retirement plans, profit sharing plans, deferred compensation plans, 403(b) plans, IRAs and personal savings are considered outside savings.


So, here's how much of a retirement benefit you can expect to receive if:
  • You're an FRS participant retiring at age 62 with 30 years of service
    Pension Plan - replaces 48% of the average of your highest 5 years of salary, which is the equivalent of 44% of your final year's salary
    Investment Plan - replaces 38% of your final year's salary (assumes you earn an investment return of 8% each year)
  • You have 20 years of service, leave the FRS at age 52 to work somewhere else and begin receiving your retirement benefit at age 62
    Pension Plan - replaces 22% of your final year's salary
    Investment Plan - replaces 30% of your final year's salary (assumes you earn an investment return of 8% each year)

Social Security + FRS Retirement Benefit + Outside Savings = Retirement Income
The MyFRS Financial Guidance Line and MyFRS.com have tools to help you identify:
  • How much income you will need to replace during retirement,
  • Your sources of retirement income, and
  • How likely it is that you will reach your "income replacement" goal (i.e., 70% - 90% of your current salary) if you continue doing what you're doing.
These resources will also help you develop a saving and investment plan to increase the odds of meeting your income replacement goal.
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