Your CalSTRS retirement benefit is a defined benefit pension. With five years of service credit, you’re eligible for a guaranteed lifetime retirement benefit based on a formula set by law:
Service Credit x Age Factor x Final Compensation = Retirement Benefit
Ways to Increase Your Benefit
You can increase your retirement benefit by increasing one or more of the elements in the retirement benefit calculation formula. For instance, you can increase your service credit by working longer or purchasing additional service credit. In addition, by working longer and retiring later, you could increase your age factor.
Deciding When To Retire
You can retire either:
- At age 50 with at least 30 years of service credit
- At age 55 with at least five years of service credit
An additional requirement for retirement is either:
- After the most recent refund, at least one year of credited service must have been performed
- Retirement must be concurrent with retirement under any of
- California Public Employees’ Retirement System
- University of California Retirement System
- San Francisco City and County Employees’ Retirement System
- Legislators’ Retirement System
- A system covered by the County Employees’ Retirement Law of 1937
Reduced Benefit Election
To apply for this program you must be:
- At least age 55
- Under age 60
- Have at least five years of credited service
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.
Retirement Incentive Program
The Retirement Incentive Program is available through participating school districts. The program increases the monthly benefit for eligible members.
Defined Benefit members who are eligible to retire could receive 2 years of service credit.
The Retirement Incentive Program is available to:
- School districts
- County offices of education
- Community college districts
Employers have information on the cost and restrictions for this program. To be eligible to provide the program, employers must pay the full cost of the benefit and demonstrate that providing it will result in a net savings.
You must be a Defined Benefit program member who is eligible for service retirement and retire within the time period specified by your employer for this program.
The additional service credit in this incentive program will not count toward eligibility for service retirement. Other benefit enhancements, such as the following, do not count toward eligibility:
- One-year final compensation
- Career factor
- Longevity bonus, even with the necessary credit
The cost of the benefit can only be paid by the employer. The participating employer must fund a full 2 years of service credit. CalSTRS will not grant partial benefits.
Estimating Retirement Benefit
To estimate your retirement benefit including the retirement incentive, use the CalSTRS Retirement Benefits Calculator.
You may also schedule a benefits planning session.
The ongoing benefit provided by the incentive is lost if you:
- 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 at 800-228-5453.
How To Calculate Your Retirement Benefit
Calculating a Member-Only Defined Benefit retirement includes three elements:
Age Factor x Service Credit x Final Compensation
= Retirement Benefit (member only)
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 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. If employed full time, the service credit granted for unused sick leave is determined by dividing the number of accumulated unused sick leave days by the number of base service days, excluding school and legal holidays, required to complete the last school year. If employed on a part-time basis, the base service days are calculated in proportion to the full-time equivalent.
CalSTRS can only accept sick leave reporting from a member’s last employer for retirements effective prior to January 1, 2013. For retirements effective on or after January 1, 2013, CalSTRS can accept sick leave reporting from multiple employers a member worked for during their last school year, provided sick leave was not transferred between employers.
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:
- Career factor
- Longevity bonus, which is given for 30 or more years of service credit earned by December 31, 2010.
- 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
Unused Sick Leave Example
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.
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.
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 either:
- The employer
- The employee
- Both the employer and employee
The longevity bonus is a permanent addition to the monthly retirement benefits of qualified members. Members who retire after January 1, 2001, and have 30 or more years of service credit before December 31, 2010, benefit from the bonus.
As of December 31, 2010, the window period to earn eligibility for the longevity bonus is closed. If you had 30 or more years by December 31, 2010, you continue to increase your longevity bonus with each year of service credit to a maximum of $400 for 32 or more years.
Remember, if you did not have at least 30 years on December 31, 2010, you are not eligible for the bonus.
Electing an Option
You can elect an option to provide a lifetime monthly benefit to another person when you die.
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 elect 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.
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.
This option allows various choices. You may:
- Name one option beneficiary if you retain a portion of your benefit as a Member-Only Benefit
- Name two or more option beneficiaries, with an option choice for each, and retain a portion of your benefit as a Member-Only Benefit
- 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 preretirement option), plus the option you elect, determine the percentage of your Member-Only Benefit. This percentage is called an option factor, that will be used in calculating your retirement 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.
The option you elect will determine either:
- The benefit your option beneficiary receives following your death
- The benefit you receive following your option beneficiary’s death
Adding, Changing or Canceling Your Option Election
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 and either:
- A final decree or dissolution of marriage or registered domestic partnership has been entered, or filed an endorsed termination of registered domestic partnership
- A judgment of nullity has been entered
- An order of separate maintenance has been made on or after January 1, 1978
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.
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 electing 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 election and beneficiary addition will be effective six months after CalSTRS receives the designation.
Nonspouse 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% Beneficiary Option, your nonspouse option beneficiary cannot be more than exactly 19 years younger than yourself.
- Under the Compound Option, your nonspouse option beneficiary or beneficiaries cannot be either more than exactly 19 years younger than yourself under the 75% Beneficiary Option, or more than exactly 10 years younger than yourself under the 100% Beneficiary Option.
When you choose a new option 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, contact CalSTRS for an estimate of your new benefit amount.