To help find answers to your retirement questions, we highly recommend attending a CalSTRS Retirement Check-Up workshop. (If you are considering filing for disability retirement, please refer to Disability Benefits Programs.)

Deciding When To Retire
You can retire as early as age 50 with at least 30 years of service credit, or you can retire at age 55 with at least five years of service credit.

An additional requirement for retirement is:

• At least one year of credited service must have been performed after the most recent refund
- or -
• Retirement must be concurrent with retirement under the California Public Employees’ Retirement System, University of California Retirement System, San Francisco City and County Employees’ Retirement System, Legislators’ Retirement System, or a County Employees’ Retirement Law of 1937 system.

Early Retirement Alternatives

Standard Early Retirement
If you have at least five years of credited service and are at least age 55 but under age 60, you may retire early with a reduced benefit. The monthly benefit is calculated in the same manner as normal retirement. However, the 2 percent age factor payable at age 60 is reduced for each full or partial month between your age at retirement and your 60th birthday.

30 and Out
If you are at least age 50 but under age 55, with at least 30 years of credited service, you can apply for retirement under this alternative. The monthly benefit is calculated in the same manner as normal retirement. However, the 2 percent age factor payable at age 60 is reduced for each full or partial month between your age at retirement and your 60th birthday. While the age factor is reduced, the career bonus of 0.2 percent for 30 years or more of service credit is added to the age factor.

Early Retirement Limited Term Reduction Program
If you are at least age 55, but under age 60, and have at least five years of credited service, you can apply for retirement under this alternative. You will receive one-half the monthly benefit amount calculated as if you were age 60. The reduced benefit will continue for the same number of months after age 60 that you received benefits before age 60. After that, the normal Service Retirement benefit will be paid.

Note: Although cost-of-living adjustments will accrue for this program, increases are not payable under this program until the normal service retirement benefit is paid.

Retirement Incentive Program

School districts may participate in the Retirement Incentive Program, which would increase the monthly benefit for eligible members.

Under this program, Defined Benefit members who are eligible to retire could receive two years of service credit, often called a "golden handshake."

The program became effective January 1, 2004, and employers may decide to offer the incentive at any point in the future.

School districts, county offices of education and community college districts may participate in the CalSTRS Retirement Incentive Program if they are able to pay the full cost of the benefit and demonstrate that providing it will result in a net savings. CalSTRS has provided information to employers on the cost and restrictions for this program.

Eligibility
To take advantage of the incentive, you must be eligible for service retirement and retire within the time period specified by your employer.

Restrictions
The additional service credit given in the incentive program will not count toward eligibility for service retirement or the credit necessary for other CalSTRS benefit enhancements such as one-year final compensation, career factor and longevity bonus.

Also, you cannot pay the cost of the benefit in lieu of your employer. CalSTRS will not grant partial benefits; the participating employer must fund a full two years of service credit.

Post-Retirement Employment
You will lose the ongoing increase in your benefit provided by the incentive if you do any of the following:

• Become an active member again by returning to CalSTRS-covered employment (reinstatement).
• File for unemployment within a year of retirement.
• Return to CalSTRS-covered employment with the school district that granted the benefit within five years.

For More Information
Contact CalSTRS toll-free at 800-228-5453 or visit the calculators page for help figuring the potential retirement incentive boost to your retirement benefit

How To Calculate Your Retirement Benefit

The formula for calculating a Member-Only Defined Benefit retirement includes three elements:

Age Factor x Service Credit x Final Compensation
= Retirement Benefit (member only)

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

The age factor is set at 2 percent at age 60. The age factor is decreased if you retire before age 60 and increased to a maximum of 2.4 percent if you retire later than age 60.

A 0.2 percentage point career factor will be added to your age factor if you retire with at least 30 years of earned service credit up to a maximum age factor of 2.4 percent.

Service Credit
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 must have earned compensation for working full time during the year to receive one full year of service credit.

In addition to credit for actual service, you may receive service credit for creditable compensation received for certain employer-approved leaves of absence.

Service credit may also be purchased under certain circumstances.

A member’s service credit is one of the factors used to determine eligibility for benefits payable under the Defined Benefit Program. For example, you must have a minimum of five years of service credit to be eligible for a service retirement benefit.

Service credit is used to calculate your service retirement benefit, as well as the surviving spouse or registered domestic partner benefit payable under Coverage A and Coverage B.

Refer to your CalSTRS Retirement Progress Report to determine how much service is currently credited to your account.

Sick Leave Credit
Additional service credit will be granted at retirement for unused sick leave. The service credit granted for unused sick leave is determined by dividing the number of accumulated unused sick leave days (as certified by your last employer) by the number of base service days (excluding school and legal holidays) required to complete the last school year, if employed full time.

If employed on a part-time basis, the base service days are calculated in proportion to the full-time equivalent.

Sick leave service credit cannot be used to meet eligibility requirements for service retirement. However, up to two-tenths of one year of unused sick leave may be used to qualify for the career factor; the longevity bonus, which is given for 30 or more years of service; and for the 25-year threshold for one-year final compensation.

Unused Sick Leave Determination Formula:

Accumulated Days of Unused Sick Leave
÷ Number of Base Days for Full-Time Service
= Service Credit Amount Granted

Example - Unused Sick Leave
Rick Jones has taught for 20 years. He has 125 sick days and 182 base service days.

125 (unused sick days)
÷ 182 (number of days for full-time service)
= .687 service credit for unused sick leave

This is added to Rick's 20 years of credited service for a total of 20.687 years of service credit.

Final Compensation
If you retire with 25 or more years of service credit, CalSTRS uses your highest one-year earnable compensation as the final compensation component in your retirement calculation.

The following cannot be used to qualify for the necessary 25 years:

• Unused sick leave in excess of two-tenths of one year.
• Nonqualified service credit
• Retirement incentive credit

For members with fewer than 25 years of service credit, final compensation is based on the highest average earnable compensation during any period of 36 consecutive months of paid employment covered by CalSTRS.

Note: Nonconsecutive final compensation is available for those members who received a salary reduction due to a reduction in school funds. Upon certification from the employer, CalSTRS will use any three nonconsecutive school years to determine final compensation.

Use of one-year final compensation is available for eligible classroom teachers with fewer than 25 years of service credit provided it has been included in a written collective bargaining agreement and all costs are paid by the employer, the employee or a combination of the two.

Longevity Bonus
A longevity bonus will be permanently added to your monthly Member-Only retirement benefit if you accumulate at least 30 years of credited service by January 1, 2011.

If you have at least 30 years of credited service by 2011, your monthly benefit will be increased by a longevity bonus.

The longevity bonus amount depends on the years of service credit at retirement.

• 30 years of credit = $200 per month bonus
• 31 years of credit = $300 per month bonus
• 32 years or more of credit = $400 per month bonus

Electing an Option

An option is a plan feature that allows you to distribute your retirement benefit over your life and the life of your option beneficiary.

You can select an option if you are eligible to retire but not yet ready to retire.

Once you retire, your option election is irrevocable, except under certain limited circumstances.

The following option selections took effect January 1, 2007:

Member-Only Benefit
This provides the highest possible benefit to the retired member but does not provide a monthly benefit to a beneficiary after the death of the retired member.

50% Beneficiary Option
Provides your option beneficiary with 50 percent of the amount you were receiving upon your death. If your option beneficiary dies before you, your benefit will rise to the Member-Only Benefit.

75% Beneficiary Option
Provides your option beneficiary with 75 percent of the amount you were receiving upon your death. If the option beneficiary dies before you, your benefit will rise to the Member-Only Benefit.

100% Beneficiary Option
Provides your option beneficiary with 100 percent of the amount you were receiving upon your death. If the option beneficiary dies before you, your benefit will rise to the Member-Only Benefit.

Compound Option
Allows various choices. You may a) name one option beneficiary if you retain a portion of your benefit as a Member-Only Benefit, b) name two or more option beneficiaries, with an option choice for each and retain a portion of your benefit as a Member-Only Benefit, or c) name two or more option beneficiaries, with an option choice for each and not retain any of your benefit as a Member-Only Benefit.

How Choosing an Option Changes Your Benefit
The formula for calculating a benefit reduced by the election of an option is:

Member-Only Benefit x Option Factor
= Benefit Amount

Your age and the age of your option beneficiary on the effective date of retirement (or time of election of a pre-retirement option), plus the option you elect, determine the option factor that will be used in calculating your benefit.

An option provides you with a reduced retirement benefit based on a percentage of your benefit. If you choose an option at the time you retire, the percentage is based on your age and the age of your option beneficiary as of your effective date of retirement.

If you decide to choose an option before retirement, the option factor when you retire will be the higher of the option factor in effect when the option was chosen before retirement or on the date of retirement.

The option you elect will determine the benefit your option beneficiary receives following your death or the benefit you receive following your option beneficiary’s death.

Adding, Changing or Canceling Your Option Selection
Once you retire, your option election can be changed only under the following four circumstances:

Death of Beneficiary: If your original option beneficiary dies after the effective date of your retirement and you had elected an option, you may elect an option again. You may elect a new option beneficiary by completing the required form and submitting a certified copy of the death certificate to CalSTRS. A further reduction to your benefit will be made.

Divorce: You may cancel your option election if the option beneficiary is your spouse or partner, or former spouse or partner, on or after January 1, 1978 if:

• A final decree or dissolution of marriage or registred domestic partnership has been entered, or filed an endorsed termination of registered domestic partnership.
• A judgment of nullity has been entered, or
• An order of separate maintenance has been made.

After you notify CalSTRS, you may elect to receive the Member-Only Benefit from the date of receipt of notification or to elect a new option. You may also designate a new option beneficiary. Your choice must be consistent with your court order and must not result in any additional liability to CalSTRS.

Note: If you cancel your option election as a result of a divorce or termination of domestic partnership and you elect to receive your Member-Only Benefit, the amount that your Member-Only Benefit was previously reduced will not be reimbursed to you.

Spouse or Partner: If you had previously designated a person other than your spouse or registered domestic partner as your option beneficiary, you may cancel your option election and elect an option designating your spouse or partner as your option beneficiary. Your benefit will be subject to an actuarial reduction based on your age and the ages of your prior beneficiary and your spouse or partner.

Newly Married or Registered in Domestic Partnership: If you were unmarried or unregistered at retirement and receiving a Member-Only Benefit, you can choose an option and name your new spouse or partner as an option beneficiary if you later marry or register. You must be married or registered at least one year before selecting the option and naming the option beneficiary. The Member-Only Benefit you were receiving will be actuarially reduced to reflect your potential life span and the life span of your option beneficiary. The option selection and beneficiary addition will be effective six months after CalSTRS receives the designation.

Non-Spouse Option Beneficiary
If you name someone other than your spouse or a former spouse to be your option beneficiary, CalSTRS is required by federal law to impose the following age restrictions:

• Under the 75 Percent Beneficiary Option, your non-spouse option beneficiary cannot be more than exactly 19 years younger than yourself.
• Under the Compound Option, your non-spouse option beneficiary or beneficiaries cannot be either more than exactly 19 years younger than yourself under the 75 Percent Beneficiary Option, or more than exactly 10 years younger than yourself under the 100 Percent Beneficiary Option.

Benefit Adjustment
When you choose a new option and/or a new option beneficiary or beneficiaries, an adjustment to your monthly benefit will be made. Before changing your option or choosing a new option beneficiary, you are encouraged to meet with your benefits counselor to obtain an estimate of your benefit based on the new choice.