CalSTRS Retirement Benefits

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With the strength of CalSTRS behind you – 868,000 members and assets of more than $183 billion – you are assured of a future that includes a guaranteed retirement benefit.* Your CalSTRS benefits are secure, despite what might be happening in the economy. It's important for you to understand how your benefits are calculated, however, in order to make the most of this valuable defined benefit pension plan. Here are some of the highlights.

How Your Benefit Is Calculated

The California Public Employees’ Pension Reform Act of 2013 (PEPRA) significantly changed the benefits structure of CalSTRS. The benefit structure now depends on whether members were hired to perform CalSTRS creditable activities before or after January 1, 2013.

CalSTRS 2% at 60: For those first hired on or before December 31, 2012, this is the formula for calculating a member-only defined benefit:

Age Factor x Service Credit x Final Compensation = Member-Only Retirement Benefit

The age factor is the percent of final compensation to which you are entitled for each year of service credit, determined by your age on the last day of the month in which your retirement is effective.

The age factor is set at 2% at age 60. The age factor is decreased if you retire before age 60 and increased to a maximum of 2.4% if you retire later than age 60. If you retire with at least 30 years of earned service credit, a 0.2% career factor will be added to your age factor, up to a maximum age factor of 2.4%.

Service credit is the accumulated period of time, in years and partial years, during which you receive creditable compensation for service as a member of the Defined Benefit Program.

You may be able to purchase service credit or receive additional credit for unused sick leave.

Final compensation is calculated using the highest average salary for three consecutive school years, unless you have 25 or more years of qualified service credit. If you have 25 or more years of service credit, the highest 12 consecutive months of compensation will be used in your benefit calculation. If you had at least 30 years of qualified service credit by December 31, 2010, you may be eligible for a longevity bonus that adds a set dollar amount to your monthly benefit.

CalSTRS 2% at age 62: For those first hired on or after January 1, 2013, no career factor is considered when calculating a member-only defined benefit. The formula is:

Age Factor x Service Credit x Final Compensation = Member-Only Retirement Benefit

The age factor is set at 2% at age 62. The age factor is decreased if you retire before age 62 and increased to a maximum of 2.4% if you retire at age 65. There is no career factor for those hired on or after January 1, 2013.

Service credit is the accumulated period of time, in years and partial years, during which you receive creditable compensation for service as a member of the Defined Benefit Program.

The final compensation is calculated based on the highest average annual salary for three consecutive school years, regardless of years of service credit.

How Much Can You Expect

CalSTRS calculates that the median benefit paid to members who retired in 2011-12 replaced 54 percent of their highest salary. This is known as the replacement ratio.Consider whether you'd be comfortable living on 54 percent of you current income.

For members hired on or after January 1, 2103, who are subject to the 2% at age 62 formula, PEPRA will reduce the replacement ratio. CalSTRS estimates that the replacement ratio will be about 47 percent of their highest three years' salary, assuming the future member’s age and service at retirement is the same as for recently retired members.**

When Can You Retire

CalSTRS 2% at 60: For those hired on or before December 31, 2012:

  • As early as age 50 with at least 30 years of service credit.
  • At age 55 with at least five years of service credit

CalSTRS 2% at 62: For those hired on or after January 1, 2013:

  • At age 55 with at least five years of service credit

How to Make the Most of Your CalSTRS Pension Benefits

Each year, you’ll receive a Retirement Progress Report from CalSTRS. Starting in the fall of 2014 the report will be available only online. This information will help you determine what your eventual benefits might be. However, you don’t need to wait for your statement to take action.

CalSTRS offers a free Benefit Counseling Service. You can meet with a counselor in person or on the phone to review your benefits and answer any questions you may have. Go to www.CalSTRS.com for more information about scheduling a counseling session.

CalSTRS also offers workshops to help you prepare for retirement. The four core workshops are:

CalSTRS Basics — if you’re an early career educator.
CalSTRS Fundamentals — if you are 10-15 years from retirement.
CalSTRS Retirement Check-Up — if you are 3-5 years from retirement.
Retirement Income Management — if you are age 45 or older, or already retired.

Learn more about CalSTRS workshops online. You can also estimate your CalSTRS benefit online.

You’ll find detailed information in your CalSTRS Member Handbook.

* Source: CalSTRS, www.calstrs.com.

** Source: CalSTRS, www.calstrs.com/funding-future, “Sustaining Retirement Security for Future Generations: Funding the California State Teachers’ Retirement System,” February 2013, CalSTRS.

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I have calculated my estimated CalSTRS retirement benefit:

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