DROP vs. Waiting: How to Decide When to “Retire on Paper”
For faculty and staff at the University of South Florida (USF), the acronym "DROP" carries a lot of weight. Entering the Deferred Retirement Option Program is often called "retiring on paper" because it allows you to officially retire under the FRS Pension Plan while continuing to work and earn your full salary for up to 96 months.
But just because you can enter DROP doesn't always mean you should right now. In 2026, with shifting interest rates and evolving salary structures in the Tampa Bay area, the timing of your "paper retirement" can change your financial life by hundreds of thousands of dollars.
Here is how to decide if it is time to take the leap or keep waiting in Land O' Lakes or Wesley Chapel.
The Case for Entering DROP Now
The main draw of DROP is the "Double Dip." You get your regular paycheck from USF, while your monthly pension check is deposited into a separate account earning a 4.0% annual interest rate (as of 2026).
The Lump Sum Goal: If you are ready to build a massive "exit fund" to pay off a mortgage in Wesley Chapel or fund a business venture, DROP is a powerful engine.
The "Maxed Out" Factor: If you have already reached your maximum years of service credit, you aren't adding much to your pension formula by staying. In this case, every month you don't enter DROP is essentially a monthly pension check you are leaving on the table.
The Case for Waiting
When you enter DROP, your pension amount is "frozen." It is calculated based on your years of service and your Average Final Compensation (AFC) at that exact moment.
The Salary Spike: If you are a USF administrator or professor expecting a significant raise or a promotion in the next year or two, entering DROP today could be a costly mistake. Waiting allows that higher salary to be baked into your pension for the rest of your life.
The 8-Year Clock: Once you start DROP, the clock starts ticking. You have a maximum of 8 years (96 months) before you must officially terminate employment. If you aren't emotionally or financially ready to leave USF by then, waiting to enter DROP keeps your options open.
3 Questions to Ask Before You "Retire on Paper"
Before you head to the USF HR office, ask yourself these three things:
Is my salary at its peak? If you have hit the ceiling of your pay grade, there is less incentive to wait.
What is my "Bridge" plan? If you plan to stay in the Tampa Bay area after your 8-year DROP period ends, do you have a plan for health insurance and income if you aren't ready to fully stop working?
How does this affect my 403(b) or 457(b)? Many employees stop contributing to their voluntary accounts once they see their DROP balance growing. This can be a major tax mistake.
The MADE Financial Difference
Deciding when to enter DROP is one of the most significant math problems you will ever solve. At MADE Financial Design, we specialize in "DROP Optimization" for USF employees. We help you run the numbers to see if a higher monthly pension for life (Waiting) outweighs a massive lump sum (DROP).
As a Fee-Only Fiduciary, our only bias is toward what makes the most sense for your specific 2026 goals in Land O' Lakes and beyond.
Is your DROP date approaching? Don't guess on the timing. Let’s run a custom "Wait vs. DROP" analysis for your specific USF service years.
