CalSTRS Pension Projection

Your CalSTRS retirement benefit is a defined benefit pension. This means with five years of service credit, you will be eligible for a guaranteed lifetime retirement benefit based on a formula set by state law. The factors that affect your retirement benefit are your service credit, age factor and final compensation. By increasing one or more of the elements in the retirement benefit calculation formula, you may be able to increase your pension.

Service credit: Your service credit is essentially the period of time during which you receive creditable compensation and make contributions to the pension program. In addition actual service time, you may also receive compensation for some employer-approved leaves of absence. Full-time educators usually earn one year of service credit for teaching one school year. If you are a part-time teacher, service credit for one school year is the hours or days taught compared to what would be required for full-time employees.

You could also earn additional service credit if you perform extra-pay assignments for certain school activities such as school newspaper adviser, band director, athletic coach or club adviser. In addition, you may be eligible to purchase service credit for being a substitute teacher, certain active military leave, employer-approved maternity/paternity leave, teaching exchange programs or for certified teaching in a school for the hearing or sight-impaired or at a Native American school in California.

Age factor: This is the percent of final compensation you will receive for each year of service credit. This number is determined by the date you first got hired to perform CalSTRS-eligible activities and your age on the last day of the month in which your retirement becomes effective. For CalSTRS members, your age factor is set at 2% at age 60. It is decreased if you retire before age 60 and is increased to a maximum of 2.4% if you retire after the age of 60.

Final compensation: If you are a CalSTRS 2% at 60 member and you retire with 25 years or more under your belt, CalSTRS will use your highest 12 consecutive months of average annual compensation earnable as the final compensation component in your retirement benefits calculation. If you have below 25 years of service credit, your final compensation is based on your highest average annual compensation that could be earned in any period of 36 consecutive months of paid employment covered by CalSTRS.

Retirement Income Gap Calculation

Our consultants will help you determine how much money you need to retire. In order to do this, you will need to have an accurate estimate of what your expenses will be after retirement, and what your guaranteed sources of income will be post-retirement. Once you have this information, you can calculate the gap or difference between those two numbers and then determine how much money you would need to save to fill that gap or how you can achieve that by cutting down on your expenses. We can also advise you on pension maximization or strategies to receive the maximum pension payout option.

Social Security Windfall Elimination

Workers who have earned a mix of retirement benefits from jobs covered by Social Security (where they’ve made contributions to Social Security) and from work outside of the system may face added complexities when estimating their retirement income. If you have less than 30 years of earnings covered by Social Security, you should expect your retirement income to go down because of the Windfall Elimination Provision (WEP).

For workers who find themselves in this situation, the benefit reduction could be based on a number of factors including the number of years they held a job and contributed to Social Security, the size of the pension from work outside of the system and the age at which the worker takes control of retirement benefits from the outside employment. Our consultants will help you understand how WEP will affect your retirement benefits and assist you with planning for it.

Voluntary 403(b)/457 Options

Our retirement consultants can also advise you regarding how to select the proper contribution amount and provider. 403 (b) Plans generally serve as voluntary supplemental retirement savings plans designed to supplement retirement benefits coming in from state pension plans and Social Security. 457 (b) plans are supplemental retirement plans, also known as Deferred Compensation Plans (DCP) for state and local government employees including public school employees. Some public school employers offer these plans and others do not. We can help you sift through the information, especially the pros and cons of these plans so you can make an informed decision.

Planning for a Secure Retirement

Our retirement consultants have specialized knowledge and experience with regard to public school employees in California. We can help you understand the steps you need to take today so you can meet your target retirement age and receive the maximum retirement income possible. Call us today to schedule an appointment.