Know the Formula

Feb. 23, 2010 admin
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Understanding the CalSTRS Retirement formula and the value of your Defined Benefit Program are key to planning your future retirement.

How Your CalSTRS Benefit Program Works

If you’re like most people in public education, your retirement income will come from three main sources:

  • Your CalSTRS retirement benefit.
  • Your savings.
  • Your supplemental investments (403(b), 457, IRA).

You can retire as early as age 50 with at least 30 years of service credit, or age 55 with at least five years of service credit—or under the special circumstances of concurrent retirement with certain California public retirement systems.

Recent CalSTRS members—on average—retire at nearly age 62 after more than 25 years of service with a retirement benefit that replaces about 60 percent of their highest salary.

How Your Benefit Is Calculated

Your primary retirement benefit is based on a formula—not on how much money you contribute or how well CalSTRS investments perform.

As your years of service and salary increase, your retirement benefit will grow. The highest retirement benefit you can receive is the Member-Only benefit. It is based on your service credit, your age and your final compensation. It is guaranteed for your lifetime.

You can also choose to provide a lifetime monthly benefit to someone when you die. If you do, your benefit will be reduced, based on your age, your beneficiary’s age at the time you elect an option and the option you elect.

Calculate your projected retirement benefit using CalSTRS Retirement Benefits Calculator.

Contributions to Your CalSTRS Retirement

CalSTRS pays retirement benefits using a combination of investment income and contributions:

  • You contribute 8 percent of your earnings to help finance your retirement benefit. CalSTRS member contributions are among the lowest in the U.S. and have not gone up since 1972.
  • Your employer contributes an amount equal to 8.25 percent of your earnings to CalSTRS. Employer contributions have not increased since 1990.
  • The State of California contributes a percentage of the annual earnings of all members. The state’s contribution as a percentage of payroll has dropped significantly since 1998.

From January 1, 2001 through December 31, 2010, each member of the DB Program contributed 2 percent of all other CalSTRS-covered salary toward retirement. This allocation to the DBS Program ended on December 31, 2010.

Beginning January 1, 2011, all of your contribution from compensation not credited to the DBS Program is credited to your DB account