Understanding Your Retirement Benefit Formula

Blog entry

As a California educator, you help build a better future for your students while you work toward a secure financial future of your own.

The CalSTRS Defined Benefit Program is the cornerstone of your educator retirement savings and also provides survivor and disability benefits. CalSTRS invests contributions from the state, your employer and your monthly paycheck to ensure a reliable monthly retirement benefit for all our members.

Components of the Benefit Formula

Your defined benefit is based on three factors: age at retirement, years of creditable service and final compensation. Your age at retirement is associated with a factor that is multiplied times your years of service and final compensation.

If you were hired before January 1, 2013, you’re covered under the CalSTRS 2% at 60 benefit structure. If you were hired on or after that date, you’re covered under the CalSTRS 2% at 62 benefit structure.

You can retire with a pension once you’re age 55 and have five years of service credit. If you’re under the CalSTRS 2% at 60 benefit structure and have at least 30 years of service credit, you can retire earlier. Generally, working longer and retiring later increases your monthly benefit.

Try out the Retirement Benefit Calculator to estimate your retirement benefits. Consult the CalSTRS Member Handbook and review your Retirement Progress Report for more information.

 

Service Credit × Age Factor × Final Compensation = Estimated Monthly Benefit

 

Retirement Age CalSTRS 2% at 60 Age Factor Retirement Age CalSTRS 2% at 62 Age Factor
55 1.400% 55 1.160%
56 1.520% 56 1.280%
57 1.640% 57 1.400%
58 1.760% 58 1.520%
59 1.880% 59 1.640%
60 2.000% 60 1.760%
61 2.133% 61 1.880%
62 2.267% 62 2.000%
63 2.400% 63 2.133%
64 2.400% 64 2.267%
65 2.400% 65 2.400%

Supplemental Programs Provide Padding

The CalSTRS Defined Benefit Program is a hybrid retirement system that also includes a cash balance plan—the CalSTRS Defined Benefit Supplement Program, which is funded by your and your employer’s contributions for extra duty assignments such as teaching summer school—and a voluntary defined contribution plan—CalSTRS Pension2®, which includes traditional and Roth 403(b) and 457(b) plans. The Defined Benefit Supplement Program and Pension2 are great ways to provide extra padding to your wallet.

Learn more about CalSTRS’ retirement formulas: