Plan Ahead to Fill the Retirement Income Gap

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What California’s educators need to know about Social Security

In a world with few assurances about future income, the CalSTRS Defined Benefit Program is like a security blanket for California educators. If you’ve worked a full career in education, 50-60% of your preretirement income will be replaced with your pension.

The challenge, however, is that financial experts advise replacing 80-90% of your preretirement income annually once you retire.

There are several ways to bridge that gap, but for educators like you, those choices may not include Social Security. You do not pay into Social Security for CalSTRS-covered employment, and therefore will not receive Social Security benefits from it. In addition, two federal laws, the Windfall Elimination Provision and the Government Pension Offset, may reduce any Social Security benefit you earned from non-CalSTRS employment and could eliminate your spousal Social Security benefit.

Be a Proactive Planner

You will likely need supplemental savings in addition to your CalSTRS Defined Benefit to meet your retirement savings goals.

Here’s the good news: since you don’t contribute 6.2% of your income toward Social Security like most workers do, consider contributing to a defined contribution account such as CalSTRS Pension2®. Pension2 offers traditional and Roth 403(b) and 457(b) programs to all school employees.

To plan ahead, you can calculate how the Government Pension Offset and Windfall Elimination Provision will impact your Social Security benefit by visiting ssa.gov.

CalSTRS also offers online educational videos and benefits planning services to help you plan for retirement.

History Lesson: CalSTRS and Social Security

  • 1913: CalSTRS was established by law to provide retirement benefits to California’s public school educators from prekindergarten through community college.
  • 1935: Social Security was established as a modest retirement system for private sector employees. State and local government employees were excluded.
  • 1950: Social Security was amended to allow public employees not covered by a state or local retirement system to opt in to the program.
  • 1954: Coverage was made available to public employees covered by a state plan on a voluntary basis. The choice was up to the states, subject to a majority vote of the members of the plan. If Social Security coverage was elected, all current and future employees would be covered.
  • 1956: The California Teachers Association surveyed its membership to gauge interest in either pursuing legislation to establish survivor benefits through CalSTRS or joining Social Security. Members voted 4 to 1 in support of a survivor benefits program through CalSTRS instead of joining Social Security.
  • 1977 and 1983: The Government Pension Offset and Windfall Elimination Provision were signed into federal law.
    • “Before 1983, people whose primary job wasn’t covered by Social Security had their Social Security benefits calculated as if they were long-term, low-wage workers. They had the advantage of receiving a Social Security benefit representing a higher percentage of their earnings, plus a pension from a job for which they didn’t pay Social Security taxes. Congress passed the Windfall Elimination Provision to remove that advantage.” – Social Security Administration, Windfall Elimination Provision, 2019
  • Learn more about the history of CalSTRS and Social Security by reading pages 93-99 of the CalSTRS Overview.