Postretirement earnings limit and separation from service effect on retirement benefit

General Information

Current and previous postretirement earnings limits:

School year Earnings limit
2021–22 $48,428
2020–21 $47,713
2019–20 $46,451
2018–19 $45,022
2017–18 $43,755
2016–17 $41,732
2015–16 $40,321
2014–15 $40,173
2013–14 $39,903

Learn about other limits that may affect you.

Examples of financial consequences of exceeding the separation-from-service retirement and earnings limit

Below are three scenarios of retired CalSTRS members who have exceeded one or both of the earnings limits.

Example 1

Mr. Jones retires June 30, 2020. He receives $5,700 per month in retirement from CalSTRS. He returns to employment for two school districts in the California public school system 180 calendar days after his retirement date. By June 2021, he earns $22,000 from District 1 and $32,000 from District 2, for a total of $54,000. He exceeds the 2020-21 earnings limit of $47,713 by $6,287 ($54,000 – $47,713= $6,287). CalSTRS will collect the excess earnings dollar-for-dollar from his gross monthly retirement benefit.

CalSTRS will collect the $6,287 of excess earnings for fiscal year 2020–21 from Mr. Jones’s $5,700 gross monthly retirement benefit as follows:

Month Monthly benefit Receivable balance Monthly deduction Benefit received
1 $5,700 $6,287 $5,700 $0
2 $5,700 $587 $587 $5,113

 

Example 2

Ms. Garcia retires June 30, 2020. She receives $8,100 per month in retirement from CalSTRS. After her retirement, she returns to employment in the California public school system on July 1, 2020. She returns to work prior to completing the 180-calendar day separation-from-service requirement.

Ms. Garcia earns $4,200 each month in postretirement earnings for a total of $50,400 by June 30, 2021. During the first 180 calendar days of employment after her retirement, she earns $25,200 in postretirement earnings. She is restricted from earning any amount for the first 180 calendar days after her retirement date. In addition, she exceeds the 2020-21 annual earnings limit of $47,713 by $2,687 ($50,400 – $47,713= $2,687). CalSTRS is required to collect $27,887 ($25,200 + $2,687 = $27,887).

CalSTRS will collect the $27,887 of excess earnings from Ms. Garcia’s $8,100 gross monthly retirement benefit as follows:

Month Monthly benefit Receivable balance Monthly deduction Benefit received
1 $8,100 $27,887 $8,100 $0
2 $8,100 $19,787 $8,100 $0
3 $8,100 $11,687 $8,100 $0
4 $8,100 $3,587 $3,587 $4,513

 

Example 3

Mr. Smith retired June 30, 2020. He receives $10,000 per month in retirement from CalSTRS. He returns to employment for a third-party employer and works as an interim superintendent for a school district in the California public school system beginning 180 calendar days after his retirement date. By June 30, 2021, he earns $108,000. He exceeds the 2020-21 earnings limit of $47,713 by $60,287 ($108,000 – $47,713= $60,287). CalSTRS will collect the excess earnings dollar-for-dollar from his gross monthly retirement benefit.

CalSTRS will collect the $60,287 of excess earnings for fiscal year 2020–21 from Mr. Smith’s $10,000 gross monthly retirement benefit as follows:

Month Monthly benefit Receivable balance Monthly deduction Benefit received
1 $10,000 $60,287 $10,000 $0
2 $10,000 $50,287 $10,000 $0
3 $10,000 $40,287 $10,000 $0
4 $10,000 $30,287 $10,000 $0
5 $10,000 $20,287 $10,000 $0
6 $10,000 $10,287 $10,000 $0
7 $10,000 $287 $287 $9,713