2020 FRS Letter

2020 FRS Legislation Developments

Did you get your Free Copy of our FRS booklet?

For the latest updates, listen to our weekly podcast.

Do you need a strategy shift under the FRS Investment Plan?


January 16, 2020


Dear State of Florida Employee,


Welcome to 2020!  How has it been 20 years since we rang in the new millennium!  On December 31, 1999, the DOW set a then record high of 11,497.  On December 31, 2019 the DOW closed at 28,538.  That’s a pretty good return over those 20 years considering the litany of events that occurred!

  1. Market Commentary.

2019 certainly generated a great return with the DOW up 22% and the broader markets up even more for the best calendar year since 2013.  But remember, a lot of that performance was a recovery from the 15% decline in the last three months of 2018.  The markets are only up about 7% from September of 2018 even with the big return for 2019.

The major drivers for 2019 were consumer confidence and lower interest rates.  As we head into 2020, those catalysts appear to have continued strength.  Consumer savings is double from just a decade ago and consumer debt relative to GDP is at its lowest level since 2003.  Interest rates are certainly not expected to rise anytime soon either.  Consequently, as we detailed in our weekly radio show/podcast from December 29, we expect 2020 to produce positive results for the markets on the upper end of the historical average of 8-10%.  Stay tuned for how that plays out.  For 2019, our annual tongue in cheek fearless forecast turned out to be 99.5% accurate!

As with any year, 2020 will have its share of volatility – we’ve already seen that just a few days into the year with the headlines swinging from the positive (a China trade deal to be signed later this month) to the negative (heightened Middle East tension).  As always, volatility is a normal part of the markets and history and countless studies confirm that being consistent is the best option for achieving investment results over time.

  1. Our Weekly Podcast; Upcoming Meetings & FRS Booklet.


Many of you know we host Central Florida’s longest running radio program but did you know it is now available as a podcast.  Dollars and Sense is broadcast live every Sunday morning from 9:00 AM to 10:00 AM on Newsradio 93.1 and AM 540.  The show is then converted to both audio and video podcasts.  To listen,  follow us on Facebook under Nelson Financial Planning and be sure to like us too!  To watch, subscribe to our Nelson Financial Planning channel on Youtube.  We are also on a variety of other platforms like Twitter, itunes, Google and many others.  Visit our website at www.NelsonFinancialPlanning.com to find your favorite podcast format.


Our spring client meetings are rapidly approaching. These meetings represent an opportunity for you and your friends to hear from senior financial personnel about the markets and the economy.  We are particularly excited to welcome Dr. Sean Snaith to our January 29 event.  Dr. Sean Snaith is the Director of the Institute for Economic Forecasting at UCF and is a nationally recognized economist and highly sought after speaker.


Wednesday, January 29, 2020 from 5:30 – 7:00 PM

Dr. Sean Snaith of UCF featuring dinner and drinks


Thursday, March 26, 2020 from 5:30 – 7:00 PM

Mark Seaman with American Funds featuring dinner and drinks


Our Booklet – The State of Your Retirement; The Essential Guide for all State of Florida Employees – continues to be the one source for state employees that describes all of unique choices you face at retirement.  The latest edition includes information about your eligibility for the Health Insurance Subsidy along with a chapter on the importance of 457 Deferred Compensation Plans. Please be sure to call (407-629-6477) or email (Joel@NelsonFinancialPlanning.com) us to request your free copy today.


III. Is a Strategy Shift under the FRS Investment Plan necessary for you?


If you are in the FRS Investment Plan, the table below shows the most recent performance of the funds we typically recommend.  This mix represents a more growth approach which reflects the accumulation phase of life – those years when you are working, saving and accumulating the resources to retire.  However, as you approach retirement, you should enter into more of a growth and income approach.  Receiving income while maintaining some growth to cover that income becomes paramount in retirement.  This shift means that your investment mix needs to adjust as well.  We encourage those that are within 3-5 years of retirement to review their investment allocation.  As always, we are happy to provide free consultations to state employees who would like to review their investment allocation.  Simply contact the office at 407-629-6477 to schedule a conversation and be sure to have your login information handy.


  1. 2020 Legislative Update.


In a sharp contrast from prior years, there appears to be a number of proposed bills in the upcoming Florida Legislative session that in fact benefit state employees.  For many years, your benefits have been getting cut in response to the  economic decline of 2008.  Specifically after 2008 there were substantial cuts in the employer contribution rates to FRS which had a profound impact on your retirement.  However, over the years, as the markets and economy have improved so to has the state of the Florida Retirement System.  As of November 1, 2019, the state’s FRS Pension Plan now has nearly $165 billion invested in a mix that is 70% in equities and 30% in cash and bonds – a very typical asset allocation that we follow as well for retirees.  This is a dramatic improvement over the $110 billion that was in the plan just 10 years ago.


With those improved finances, there is finally proposed legislation that increases the contribution rates by employers to your retirement – albeit still not to the levels that existed prior to 2008!  SB 992 proposes raising the employer contribution rates from 6.3% to 10.3% for regular class employees and from 14% to 18% for special risk employees over a three year period between 2021 and 2024.  This would certainly contribute to a better retirement picture for all state employees.  Unfortunately, under this bill, state employees are also being forced to increase their required contributions from 3% to 5% for regular class employees in 2021 and from 3% to 5% for special risk employees between 2021 and 2024.


  1. Retirement Under the Florida Retirement System.


There are many factors that go into properly planning your retirement.  The various types of FRS retirement accounts such as IRAs, FRS Investment Plan Accounts and Deferred Compensation Accounts are unique and have different tax consequences depending on your age.  These are very important and very complicated issues that require proper planning in order to have the most flexibility in retirement.


If you are thinking of retiring or have recently done so, please contact us at 407-629-6477 to schedule an appointment to discuss planning your retirement in the most tax and cost efficient manner.  THESE RETIREMENT PLANNING SESSIONS ARE ABSOLUTELY FREE NO OBLIGATION CONVERSATIONS THAT ANALYZE ALL YOUR RETIREMENT OPTIONS.


We look forward to seeing you at our events on January 29 and March 26. In addition, please be sure to visit the latest exhibition at Cornell Fine Arts Museum at Rollins College.  “African Apparel: Threaded Transformations across the 20th Century” runs from January 18 to May 17 and we are proud to be a presenting sponsor.  As always, please contact us with any questions on any financial matter.






Joel Garris

FRS Investment Plan Current Growth Recommendations

As of December 31, 2019 2019 2018 2017 3 YR
5 YR
10 YR
FRS U.S. Large Cap Stock Fund 28.87% -7.00% 25.49% 14.57% 11.03% 13.82%
FRS Global Stock Fund 30.48% -5.57% 29.26% 16.78% 11.44% 10.96%
FRS Foreign Stock Fund 27.40% -14.91% 31.17% 10.20% 6.15% 6.41%
FRS U.S. Stock Market Index Fund 31.09% -5.20% 21.24% 14.64% 11.33% 13.49%
FRS Small/Mid Cap Stock Fund 29.14% -8.19% 16.31% 11.31% 10.33% 14.51%
Average 29.40% -8.17% 24.69% 13.50% 10.06% 11.84%

Note: 10 year returns as of November 30, 2019


Performance data quoted represents past performance, which is no guarantee of future results.  Please note that the information provided in this letter has NOT been approved or endorsed by the State of Florida or the Florida Retirement System.  All examples shown reflect actual performance; however, individual results may vary and values do fluctuate.