CalSTRS & CalPERS Pension Guidance
Understanding your California public pension is the first step toward a secure retirement. We help educators and public employees navigate their benefits, calculate their income, and overcome the retirement pay cut.
Understanding Your California Pension System
CalSTRS
The California State Teachers' Retirement System is the largest educator-only pension fund in the world, serving over 1 million members including:
- K-12 public school teachers
- Community college instructors
- School administrators
- Educational support personnel
CalPERS
The California Public Employees' Retirement System is the largest public pension fund in the United States, serving over 2 million members including:
- State government employees
- County and city workers
- Public safety personnel
- School district non-teaching staff
The January 1, 2013 Game Changer
The California Public Employees' Pension Reform Act (PEPRA) took effect on January 1, 2013, significantly changing retirement benefits for new members. Understanding which formula applies to you is critical.
CalSTRS Formulas
2% @ 60
Members hired before January 1, 2013 receive 2% of their final compensation for each year of service at age 60. You can retire as early as age 55 with a reduced benefit.
2% @ 62
Members hired on or after January 1, 2013 receive 2% of their final compensation for each year of service at age 62. You can retire as early as age 55 with a reduced benefit.
CalPERS Formulas
2% @ 55
Members hired before January 1, 2013 receive 2% of their final compensation for each year of service at age 55. You can retire as early as age 50 with a reduced benefit.
2% @ 62
Members hired on or after January 1, 2013 receive 2% of their final compensation for each year of service at age 62. You can retire as early as age 52 with a reduced benefit.
What Does This Mean for You?
If you were hired after January 1, 2013, you need to work longer to receive the same benefit as someone hired before that date. A CalPERS member now must wait until age 62 to get their full 2% factor, compared to age 55 for classic members - that's 7 additional years. For CalSTRS, it's 2 additional years (62 vs 60).
Understanding the Age Factor
The age factor is the percentage multiplied by your years of service and final compensation to determine your monthly benefit. Retiring earlier means a lower age factor and smaller pension.
CalSTRS Age Factors (2% @ 62)
| Retirement Age | Age Factor | % of Full Benefit |
|---|---|---|
| Age 55 | 1.16% | 58% |
| Age 57 | 1.48% | 74% |
| Age 60 | 1.76% | 88% |
| Age 62 | 2.00% | 100% |
| Age 65+ | 2.40% | 120% |
CalPERS Age Factors (2% @ 62)
| Retirement Age | Age Factor | % of Full Benefit |
|---|---|---|
| Age 52 | 1.00% | 50% |
| Age 55 | 1.30% | 65% |
| Age 57 | 1.50% | 75% |
| Age 60 | 1.80% | 90% |
| Age 62 | 2.00% | 100% |
| Age 67+ | 2.50% | 125% |
Final Average Compensation Explained
Your final average compensation (FAC) is a critical component of your pension calculation. It's the average of your highest-earning consecutive years.
CalSTRS
Before 01/01/2013
Highest 3 Years
Average of your 3 highest consecutive years of compensation
After 01/01/2013
Highest 3 Years
Same 3-year average, but with a compensation cap
CalPERS
Before 01/01/2013
Highest 1 Year
Your single highest year of compensation
After 01/01/2013
Highest 3 Years
Average of 3 highest consecutive years, with compensation cap
Pension Calculation Examples
Your pension is calculated using a simple formula. Let's see how the January 2013 changes affect your retirement income.
The Pension Formula
Service Credit × Age Factor × Final Average Compensation
CalSTRS Example: Teacher with 30 Years of Service
Classic Member (2% @ 60)
Hired before January 1, 2013
PEPRA Member (2% @ 62)
Hired on/after January 1, 2013
Difference: -$6,480/year (-$540/month)
CalPERS Example: State Employee with 25 Years of Service
Classic Member (2% @ 55)
Hired before January 1, 2013
PEPRA Member (2% @ 62)
Hired on/after January 1, 2013
Difference: -$14,000/year (-$1,166/month)
The Retirement Pay Cut Reality
For most California public employees, retirement means a significant reduction in income. Even with a full career, your pension typically replaces only 50-75% of your working salary.
25-50%
Income reduction at retirement
3%+
Annual inflation erodes purchasing power
20-30 Years
Average retirement duration
The Hard Truth:
- Your pension is a fixed monthly payment that doesn't keep pace with inflation
- You cannot access your pension as a lump sum for emergencies or opportunities
- PEPRA members face an even larger pay cut if retiring before age 62
- Choosing survivor benefits reduces your monthly payment even further
Overcome the Pay Cut with Smart Planning
Carlos Milsap specializes in helping California public employees create supplemental income streams that bridge the gap between their pension and their actual retirement needs.
Index Universal Life (IUL)
Create a tax-free supplemental income stream to fill the gap your pension leaves behind:
- Tax-free income to supplement your pension
- Market protection - your cash value never decreases
- Living benefits for critical illness while still working
- Flexible access to funds for emergencies
Fixed Index Annuity (FIA)
Add guaranteed lifetime income on top of your pension:
- Guaranteed income you can never outlive
- Principal protection - no market risk
- Growth potential linked to market performance
- Perfect for 403(b) or 457 rollovers
Example: Bridging the Gap
Pension Income: $4,000/month
Pre-Retirement Income: $6,500/month
Monthly Gap: $2,500/month
With IUL or FIA supplemental income, you can fill that $2,500 gap and maintain your lifestyle in retirement.
How We Help You Master Your Pension
Navigate Your Portal
We walk you through the myCalSTRS or my|CalPERS portal step-by-step, helping you access your account, view service credit, and understand your benefit statements.
Calculate Your Benefits
We help you use pension calculators to project your monthly retirement benefit based on your years of service, retirement age, and final average compensation.
Plan Your Strategy
We analyze your complete financial picture and develop a customized plan to ensure you can maintain your lifestyle throughout retirement.
Why California Public Employees Trust Carlos
Pension Expertise
Deep understanding of both CalSTRS and CalPERS systems and how to maximize your benefits
Educational Approach
No pressure - just clear explanations so you can make informed decisions about your future
Local to California
Based in San Diego, serving California public employees throughout the state
Comprehensive Planning
Solutions that work alongside your pension for complete retirement security
Ready to Explore Your Options?
Schedule a no-obligation consultation with Carlos to discuss your retirement income strategy and learn how these solutions might fit your goals.
Disclaimer: This information is for educational purposes only and is not intended as financial, tax, or legal advice. CalSTRS and CalPERS are independent entities and we are not affiliated with or endorsed by either organization. Pension calculations shown are simplified examples - actual benefits depend on individual circumstances, service credit, and specific plan provisions. Age factors shown are approximations and may vary. Please consult with your pension system directly and qualified professionals for personalized advice.