As you near retirement age, it is a good time to review your current financial status and plan for your final career years and approaching retirement. If you are about age 50, or if you are within a few years of your projected retirement date, you may want to consider the following:

Retirement Counseling

How can I obtain information and retirement counseling?

Workshops

CalSTRS invites local school districts to host retirement workshops conducted by a benefit counselor. You may attend a workshop at any point in your career. However, it is particularly important for you to attend a workshop within five years of retirement. CalSTRS also encourages you to attend a workshop early in your career as part of your financial planning process. Each workshop lasts approximately two hours.

A schedule of workshops is prepared and distributed in the fall. Schedules should be available at your school site, district office or county office of education.

Personal Interview

Before you file a retirement application, schedule a retirement interview with a CalSTRS-trained benefit counselor. During this interview the benefits counselor will outline the alternatives available to you and provide you with an estimate of your retirement benefit.

The counselor can also provide information about when you will receive your retirement benefit and answer other questions you may have.

When should I schedule a pre-retirement interview?

Pre-retirement interviews should be scheduled at least six to 12 months in advance of your planned retirement date.

What information should I bring to the interview?

• the anticipated date of your retirement
• an estimate of your unused sick leave
• the number of days you are required to work during the year
• an estimate of your last three years of earnable compensation
• most recent statement of account

You are encouraged to bring your spouse or your intended or named option beneficiary to this interview. If your option beneficiary is unable to attend the interview, please be prepared to supply his or her birthday. All information shared with the benefits counselor during this interview is confidential and used only for preparing your personal retirement estimate.

What About Social Security?

Although your CalSTRS retirement is not integrated with Social Security, you should contact Social Security as part of your overall planning. You may wish to investigate whether nonteaching employment has resulted in eligibility for Social Security or if you are eligible for benefits based on a spouse or former spouse’s account. If you are eligible, your CalSTRS benefits may impact the Social Security benefits.

There are two provisions in Social Security law that may reduce your Social Security benefits if you are eligible for both a monthly Social Security benefit and a CalSTRS pension. The first, the Windfall Elimination Provision reduces Social Security benefits through an alternative calculation for individuals who qualify for both a Social Security benefit based on their own covered employment (full Social Security taxes paid) and a pension based on noncovered employment (full Social Security taxes not paid),such as CalSTRS.The second provision, the Government Pension Offset reduces Social Security benefits for spouses or surviving spouses if they are receiving a pension based on noncovered employment.

Social Security laws contain many provisions and exceptions. You should contact the Social Security Administration at 800-772-1213 for more information.

Reduced Workload Program

The CalSTRS Reduced Workload Program allows eligible members to reduce their workload from full-time to part-time duties (a minimum of 50 percent of full time) for up to ten years, normally the last ten years before retirement.

You will receive full-time service credit, while working less than full time. At the time of retirement, your benefit will be calculated as though you continued to work full time.

You must be age 55 or older, have been employed full time for a minimum of 10 years performing creditable service and have been employed full-time performing creditable service five consecutive years immediately prior to entering the program.

Both member and employer contributions are paid on the full-time earnable salary, rather than the actual part-time salary earned while participating in the program. Therefore, the employer will be required to pay a higher contribution rate for a member to participate.

The consequences of failing to work at least 50 percent as required by the program can be significant. This occurs if the member does not earn creditable compensation for at least 50 percent of full time in any one school year. Service credit for the year will be calculated on actual time worked.

For example, a member who was employed 50 percent of full time had her pay docked because she became ill and ran out of sick leave. Consequently she failed to perform creditable service for at least 50 percent of full time that year. Therefore, for that year she did not earn the service credit of one year but rather received credit only for the actual time worked.

Retiring before the end of the school year can also impact program participants in the Reduced Workload Program. After discussing the Reduced Workload Program with your employer and reviewing personal qualifications, you must enter into a contractual agreement with your employer to participate.

Concurrent Retirement

CalSTRS DB Program members at least age 55 who are also eligible to retire from certain other California public retirement systems in California may retire with less than five years of CalSTRS credited service if the member retires from both systems at the same time. Additionally,CalSTRS may use the salaries for service performed under the other retirement system to calculate the CalSTRS retirement benefit. However, if you perform creditable service with both retirement systems during the same pay period, we are required by law to use the CalSTRS salaries in the retirement benefit calculation. The other public retirement systems in California are the Legislators’ Retirement System, Public Employees’ Retirement System, San Francisco Employees Retirement System, University of California Retirement System or those systems established under the County Employees’ Retirement Law of 1937.

Pre-Retirement Election of an Option

Electing an Option Before Retirement

If you are eligible to retire, you may make a pre-retirement election of an option. This election is available if you do not yet wish to retire but want to ensure a monthly lifetime income to another person if you die before retirement. The monthly benefit paid to your beneficiary is based on the modified benefit that would have been paid if you had retired as of the date of death. At retirement, your benefit will be modified under the elected option.

Spousal Signature

If you are married, the form for pre-retirement election of an option must be signed by your spouse or the justification for non-signature of spouse form must be completed and returned with the pre-retirement election. If your spouse does not sign or the justification for non-signature is not received by CalSTRS, the pre-retirement election is not acceptable and will not be effective until the requirements are met. The election will be effective on the date signed only if it is received by CalSTRS within 30 days from the date you sign it. If the option beneficiary dies before you retire, the option is automatically canceled. The retirement benefit will be permanently reduced to pay for the period of coverage provided by the pre-retirement option.

When you retire, modification of your allowance will be made using the higher of the option factor in effect as of the date you elected the option or in effect on your retirement date.

The examples illustrate two members, one who chooses an option before retirement and another who waits until retirement to choose an option.

The member in the first example has provided a lifetime monthly benefit to a beneficiary even if the member should die before retirement. Although the benefit will be reduced at retirement, the modified benefit will be slightly higher than it would have been if the member had waited until retirement to choose an option, since the pre-retirement election of an option allows use of the younger member and beneficiary ages.

The advantages and disadvantages of choosing a pre-retirement election of an option must be assessed on an individual basis.

Advantages

If you should die prior to retirement, your option beneficiary will receive a lifetime monthly benefit. The benefit begins immediately upon your death, regardless of the age of the beneficiary. In most cases, the modified benefit will be greater than if an option is elected at the time of retirement. If you become disabled after making a pre-retirement election of an option and you have Disability Benefit, Coverage A, you may retain the option election in order to provide a monthly benefit to your option beneficiary.

Disadvantages

If you cancel or change your pre-retirement election of an option before retiring, your retirement benefit will be reduced for life to pay for the time the option was in effect.

Under Disability Retirement, Coverage B, the pre-retirement election of an option will be automatically voided as of the effective date of an approved disability retirement, however, you can then elect an option under disability retirement.

Since only one person can be designated as an option beneficiary, other survivors who may otherwise be qualified will not be eligible to receive a family or survivor benefit. (Note: Effective January 1, 2000, more than one person may be designated as an option beneficiary.)

If your option beneficiary dies before you retire and you had elected an option, the election will be automatically canceled and your retirement benefit will be assessed.

Cancellation of an Existing Pre-Retirement Election of an Option

You may cancel an existing pre-retirement election of an option at any time before retirement. A pre-retirement election of an option is canceled automatically when a member elects a new option, elects a new option beneficiary or if the option beneficiary predeceases the member.

If the pre-retirement election of an option is canceled, an assessment is calculated at retirement. As a result of legislation, the calculation of the assessment factor has changed for those members who cancel their pre-retirement election of an option on or after January 1, 1996. This change does not affect pre-retirement elections of an option canceled before January 1, 1996.

The factors in effect on the cancellation date of the pre-retirement election of an option will be used to calculate the assessment. The assessment factor is based on the following:

• the option selected
• the amount of time the pre-retirement election was in effect
• the age of the member at the time of election and cancellation
• whether the member has Coverage A or Coverage B
• whether the option beneficiary is the member’s spouse

If you are considering canceling your pre-retirement election of an option, electing a different option or naming a different option beneficiary, CalSTRS recommends you meet with a CalSTRS benefit counselor to discuss the possible effects of that change on your retirement benefit.

A spouse must sign the cancellation of a pre-retirement election of an option or a justification for non-signature must be completed and returned with the request for cancellation. If the spouse’s signature is not provided or the justification for non-signature of spouse is not received by CalSTRS, the cancellation is not acceptable and will not be effective until the requirements are met.

For more information regarding pre-retirement election of an option, call CalSTRS Teletalk at 800-228-5453 and select message #200, Benefit Counseling Services or message #300, Pre-Retirement Election of an Option.

Birthday Verification

Under some circumstances, CalSTRS will request verification of the birthday of a member and/or the option beneficiary. Acceptable documentation for birthday verification is listed in order of preference:

• certified birth record (recorded at least seven years prior to application for CalSTRS benefits)
• certified church baptismal record (recorded within six years of birth)
• transcript of listing in federal census (recorded within ten years of birth)

If you have changed your name from the name shown on the record of birth, a certified copy of the marriage certificate or court order documenting the change is required.

If you do not have any of these records, please contact CalSTRS for assistance.

Benefit Counseling Appointment

Because the election or non-election of an option determines what benefits will be available to your beneficiary, CalSTRS recommends you schedule an appointment with a benefit counselor and encourages you to bring your intended beneficiary to this interview.