Boost Your Savings

Mar. 8, 2010 CalSTRS-ca
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Build Your Personal Wealth Plan

Add to your retirement income by building extra savings. Saving on your own will help create your desired lifestyle in retirement.

The average CalSTRS retirement benefit replaces about 60 percent of a career teacher’s salary. You’ll need to close any gap between your current income and your retirement benefit with personal savings and investments. Remember: CalSTRS employment is not covered under Social Security.

It’s never too late to save for your retirement. You can begin a supplemental savings account at any time. Reap better returns by starting early.

Video: Mind Your Gap

Member Education Video: The Gap

Already Saving?

Consider increasing the amount you save each month.

Pre-Tax Savings Advantages

When you contribute directly to a 403(b) or 457 supplemental savings plan through a payroll deduction, you defer taxes on the money you contribute. You get more savings for your contribution dollar. Also, your earnings grow tax-deferred.

Power of Time and Money | Tax-Deferred Compounding

Here’s how it works

A monthly contribution of $50 into a tax-deferred 403(b) account such as CalSTRS Pension2 in the first year of work is increased by $50 each year for 15 years. After that, contributions remain the same up to 30 years. The entire investment grows tax-deferred. An added benefit of tax-deferred contributions: Your $50 investment may reduce your paycheck by only $32*.

Year Monthly Contribution Reduces Take Home Pay by Year End Value @ 7%
1 $50 $32 $623
2 100 63 1,911
3 150 95 3,912
4 200 126 6,676
5 250 142 10,256
6 300 173 14,709
7 350 221 20,097
8 400 252 26,483
9 450 284 33,940
10 500 315 42,541
11 550 347 52,366
12 600 379 63,502
13 650 411 76,040
14 700 443 90,078
15 750 475 105,721
16 800 507 123,082
30 800 507 541,979

*This hypothetical illustration assumes a combined 37% state and federal tax rate. It’s not meant to represent the performance of any investment product and should not be used to predict investment performance. Any taxes and expenses associated with an actual investment are not reflected. While taxes are paid when funds are withdrawn, investors are often in a lower tax bracket at retirement.

Save More by Paying Lower Fees

Most investment plans charge fees and expenses. Keep a close eye on these costs—even 1 percent can make a big difference in your returns and your bottom line over time.

Compare fees and expenses charged by different investments at 403bCompare.com or using the U.S. Security and Exchange Commission’s online Mutual Fund Cost Calculator at www.sec.gov/investor.shtml (select Calculate Mutual Fund Costs).

Your Employer’s Supplemental Retirement Savings Plans

CalSTRS partnered with bWiseGuys, LLC to create the 403(b) + 457(b) Information Portal. This self-navigated site is designed to help school employees find information about the supplemental retirement savings plans available through their employers.

CalSTRS Pension2®—Your Personal Wealth Plan

CalSTRS created a supplemental savings program called the CalSTRS Pension2 personal wealth plan for members in 1994. At that time, educators had few low-cost, non‑insurance products for their payroll investments.

Pension2 complements your retirement benefit by allowing you to set aside savings in low-cost, flexible funds. TIAA-CREF, a national financial services organization and the leading provider of retirement services in the academic field, serves as the program’s record keeper.

Using the supplemental savings calculator, see what you invest today could return at retirement.

CalSTRS Pension2 is a separate program with no direct connection to the CalSTRS Defined Benefit Program.

Easy Investment Options

CalSTRS Pension2 offers many advantages. Visit the Pension2 enrollment page on CalSTRS.com.

  • Four investment plans.
    • 403(b)
    • Roth 403(b)
    • 457
  • Investment strategies that match your goals.

    • Easy Choice Portfolios. Don’t have the time or experience to research 403(b) or 457 plan options? The 15 Easy Choice Portfolios combine risk tolerance and retirement target dates. The investment choices are selected by CalSTRS in conjunction with its financial planning consultant.
    • Build Your Own Portfolio. This option allows you to build your own portfolio by choosing from professionally selected core funds such as Vanguard, Dodge & Cox, TIAA-CREF and others.
  • Low fees and expenses.
  • Free unbiased advice and planning services at no additional cost.

Call Today

Call CalSTRS Pension2 toll free at 888-394-2060 or learn more on the Pension2 page on CalSTRS.com.

Review CalSTRS Member Handbook