Top 7 DROP Mistakes I See (And How to Avoid Them)

Written By Andrew Trammell

If planning retirement in Florida feels like merging onto I-95 in August—construction cones, sudden slowdowns, and at least one convertible doing 90—it’s because it is. The FRS Deferred Retirement Option Program (DROP) can be a beautiful fast lane… or a toll road you didn’t mean to take. Grab a Publix sub, keep the sunscreen handy, and let’s talk about the seven mistakes that turn a sweet DROP into a soggy sandwich—and how to dodge each one.

Quick primer: DROP lets eligible FRS members “retire on paper,” start their pension benefit, and accumulate those payments in a DROP account while they keep working for a set period. It’s powerful—if you mind the details.

1) Starting DROP at the wrong time

The mistake: Jumping in a few months too early or too late relative to normal retirement—without running the numbers.
Why it stings: Small timing shifts can ripple through total DROP accrual, your first “real” pension check, insurance windows, and taxes.
Avoid it: Compare at least two scenarios (enter at first eligibility vs. wait). Look at pension accrual, paycheck replacement, benefits timing, and taxes together—not in silos. Build a simple Year 1– 2 cash-flow plan so your timeline aligns with your life.

2) Locking the wrong payout/survivor option

The mistake: Choosing an option at the DROP entry that doesn’t fit your household (and may be hard or impossible to change later).
Why it stings: Survivor income, lifetime guarantees, and spousal protection hinge on this choice.
Avoid it: Stress-test three “what ifs”:

  • You go first: Does your spouse have enough guaranteed income?

  • Your spouse goes first: Do you know if the plan still makes sense?

  • You both live to 95: Does income last without strain?
    Pick the option that keeps the household solvent across all three, not just the higher-looking number today.

3) Tripping reemployment rules

The mistake: Separating and then returning to an FRS-covered employer too soon, in the wrong role, or under the wrong status.
Why it stings: Benefits can be suspended, clawed back, or delayed—plus stress you didn’t order.
Avoid it: Treat reemployment like a school-zone speed limit. Know what counts as “reemployment,” the waiting periods, and any exceptions before you accept anything with a badge, ID, or login. Verify with HR/official guidance and keep documentation.

4) Treating the DROP payout like “free money”

The mistake: The lump sum lands, withholdings are off, and cash gets parked in a random account—or spent—before there’s a plan.
Why it stings: Avoidable taxes and penalties, poor investment placement, and “oops” purchases that don’t match your goals.
Avoid it: Decide before the dollars move: full rollover, partial cash, staged withdrawals, or a combo. Set a written investment policy (simple is fine) and a 12–24 month withdrawal plan to smooth market risk and taxes. If you need near-term cash, pre-set a safe bucket.

5) Ignoring insurance & benefits coordination

The mistake: Entering/exiting DROP without syncing health coverage, HIS, Medicare, and retiree benefits.
Why it stings: Surprise premiums, coverage gaps, or missed subsidies.
Avoid it: Build a benefits calendar:

  • Last day worked and final paycheck dates

  • When active coverage ends and retiree/COBRA/Medicare starts

  • Medicare milestones (initial enrollment windows and penalties)

  • Health Insurance Subsidy (HIS) eligibility and timing
    Align your retirement and DROP dates to those realities.

6) Assuming overtime/leave payouts boost everything

The mistake: Counting on overtime, leave payouts, or special pay to juice calculations that don’t count the way you think.
Why it stings: Overestimated DROP accruals and plans that don’t pencil.
Avoid it: Confirm what does/doesn’t count toward benefit calculations—and when. Double-check with HR and official plan materials (not just “how it worked for my buddy”). Use conservative assumptions; let good surprises be gravy.

7) Making decisions in isolation (taxes, pension, Social Security, 457, Roth)

The mistake: Optimizing one lever (e.g., DROP timing) while accidentally de-optimizing taxes, Social Security, or 457/Roth strategy.
Why it stings: Higher lifetime taxes, lost credits, awkward cash-flow gaps—and more stress than a July theme-park line.
Avoid it: Coordinate the household plan:

  • Pension start + DROP payout approach

  • Social Security filing (break-even, survivor impact, tax interplay)

  • 457/Roth contributions, conversions, and withdrawal order
    Draft a simple “income ladder” showing where every dollar comes from in Years 1–10.

One-page “Avoid All 7” checklist

  • Confirm eligibility window and preferred DROP entry date

  • Pick payout/survivor option using a spouse-included stress test

  • Reemployment rules: know the who/when/where before you say yes

  • Decide payout path (rollover vs. cash vs. combo) + withholding settings

  • Build a benefits calendar (active → retiree/COBRA/Medicare + HIS timing)

  • Verify what counts in calculations; don’t assume—confirm

  • Coordinate pension + Social Security + 457 + Roth with a Year-1–2 cash-flow plan

Thoughtful Florida-style closing

Retirement isn’t a finish line; it’s a lane change. The water looks calm from the beach, but the currents—timing, survivor choices, reemployment rules, taxes, benefits—are always moving. Respect the markers, and DROP can be the smooth channel that gets you where you’re going without white-knuckle steering. Do the homework now, and future-you can spend hurricane season debating plywood thickness instead of payout math.

Want a quick second opinion? Book a 30-minute run-through of your DROP timeline and payout choice. I’ll show you the two or three clearest paths for your household, and we’ll pick the winner—so you can Plan, Protect & Prosper with confidence.

Educational only; not legal, tax, or investment advice. Confirm specifics with FRS materials and your HR/benefits team.

Andrew Trammell