What to Consider Before Retirement
If you are nearing age 50 or are within a few years of your projected retirement date, review your current financial status to plan for your final career years and retirement.
Reduced Workload Program
If you retire or terminate employment before the end of the school term, your agreement under the Reduced Workload Program will be revoked. You will receive service credit only for the part-time service you actually performed.
For more information about the Reduced Workload Program, see Deciding When to Retire.
Retiring from Other Public Retirement Systems
Defined Benefit Program members age 55 or older who are also eligible to retire from certain other California public retirement systems may retire with less than five years of CalSTRS service credit if they retire from both systems concurrently.
The other public retirement systems in California are:
- California Public Employees’ Retirement System.
- San Francisco Employees’ Retirement System.
- University of California Retirement System.
- Legislators’ Retirement System.
- Systems established under the County Employees’ Retirement Law of 1937. For a list of counties covered by this law, see the Glossary, “County Employees’ Retirement Law of 1937.”
For more information on concurrent retirement, see the Member Handbook.
Preretirement Election of an Option
If you are eligible to retire, you may make a preretirement election of an option to ensure a monthly lifetime income for another person or persons if you die before retirement. When you elect an option, your monthly benefit will be reduced from the Member-Only Benefit.
Before electing a preretirement election of an option, understand the advantages and consequences, including the reduction to your Member-Only Benefit.
Effect of Preretirement Option Election
The following examples illustrate the difference in benefits if you choose an option beneficiary before retirement or wait until retirement.
|Choosing a Preretirement Election of an Option|
|Option Factor||x .9213|
|Member’s Reduced Benefit||= $1,809.33|
|Choosing an Option at Retirement|
|Option Factor||x .8937|
|Member’s Reduced Benefit||= $1,755.13|
Advantages of a Preretirement Election of an Option
If you die before retirement and you made a preretirement election of an option, your beneficiary will receive a lifetime monthly retirement benefit. The benefit begins immediately after your death, regardless of the ages of your beneficiaries.
In most cases, the reduced benefit will be higher than if you elected an option at the time of retirement.
If you become disabled after making a preretirement election of an option and you have a disability benefit under Coverage A, you may retain the option election to provide a monthly benefit to your option beneficiary.
The career factor does not apply if you die before retirement without a preretirement election of an option on file at CalSTRS. For details, see the Member Handbook.
Disadvantages of a Preretirement Election of an Option
If you cancel or change your preretirement election of an option before retiring, your retirement benefit may be reduced for life. If your option beneficiary dies before you retire, the election automatically will be canceled and your retirement benefit may be permanently reduced.
Your spouse or registered domestic partner must sign the Preretirement Election of an Option form or you must complete and return the Justification for Non-Signature of Spouse or Registered Domestic Partner form with your preretirement election.
If your spouse or partner does not sign the form or we do not receive the Justification for Non-Signature of Spouse or Registered Domestic Partner form, your preretirement election will not be accepted and it will not be effective until the requirements are met.
The election will be effective on the date signed only if we receive the election form no later than 30 days after the date you sign it.
Information on registering a domestic partnership is available on the California Secretary of State’s website.
Change or Cancellation of an Existing Preretirement Election of an Option
CalSTRS must receive your Preretirement Election of an Option or Preretirement Compound Election form no later than 30 days from your signature date.
If you are an active member, the effective date of your option change is your signature date.
If you are newly retired, CalSTRS must receive the form no later than 30 days after the date your first benefit payment is issued by CalSTRS and the effective date of your option change is the day prior to your retirement date.
A preretirement election of an option is canceled automatically if:
- You take a refund.
- You elect a new option or a new option beneficiary.
- Your option beneficiary predeceases you.
If you cancel your preretirement election of an option, an assessment may apply and will be calculated at retirement. The assessment will reduce your monthly retirement benefit for life.
The factors in effect on the cancellation date of your preretirement election of an option will be used to calculate the assessment. The assessment factor is based on:
- Selected option
- Amount of time the preretirement election was in effect
- Age at the time of election and cancellation
- Whether you have Coverage A or Coverage B
- Whether your option beneficiary is your spouse or registered domestic partner
Meet with a CalSTRS benefits specialist to discuss the possible effects a preretirement change or cancellation may have on your retirement benefit. Contact CalSTRS if you have questions.
Date of Birth Verification
Under some circumstances, we will request verification of your birth date or your option beneficiary’s birth date. Acceptable documentation includes clear photocopies of:
- Certified birth record
- Passport ID page
- Certain military IDs
- State-issued IDs
If a name has been changed from the name shown on the record of birth, a copy of the marriage certificate or court order documenting the change is required. Send clear, unaltered photocopies. Contact CalSTRS if you do not have any of these records.