Aspects That Influence How Much Your CalSTRS Benefit Will Be Each Month

Rick HughesProvided by Rick Hughes

Many people encounter problems when it comes to calculating how much their CalSTRS benefit will be each month. This is an important, but difficult stage that cannot be skipped because people need to know exactly how much money they might get if they want to plan their retirement the right way.

Now, the basic formula for calculating your monthly benefit is as follows:

Service Credit × Age Factor × Final Compensation.

Of course, presenting this formula is not going to help you better understand it. So, here is some useful insight about the factors that directly affect your monthly CalSTRS benefit:

  1. The Age Factor

This aspect is calculated in the form of a percentage that it's based on how old you are when you retire. The standard sum is placed at 2% at it is available once you reach the age of 60. However, if you choose to retire before you reach 60, then you need to understand that the Age Factor benefit will decrease.

Still, if you keep working until you are 63, for instance, and only retire then, the whole benefit will be raised to a total of 2.4%. So, if you want to enjoy better financial stability and a higher CalSTRS benefit, then it's best to keep on working until you hit that age. It might not be easy, but it will be worth it in the long run.

If you want more benefit payments upfront, then you can always backdate your retirement benefit effective date. Just remember that this will lower your monthly CalSTRS benefit, especially if your age factor changes.

  1. The Service Credit

This represents the total number of school years, including partial years, during which you have worked and invested in your CalSTRS. It is important to note that you will actually earn service credit for every day you work or every day you are on paid leave. You are able to earn up to 1.00 for each full school year you have worked. Keep in mind that, if you work a part-time job, then the total service credit you receive for that year will be lower than 1.00.

But what happens if you engage in extra activities that would normally reward you with extra service credit? Well, most of the contributions that exceed the limit for one year of service credit will be placed in your Defined Benefit Supplement account.

Want to get a better idea of how this whole process works? Then be sure to get in touch with our financial advisers right away.

  1. The Final Compensation

This is the highest average compensation you can get on a yearly basis. However, to be eligible for this, you need to have over 25 years of service credit when you retire. If you have less than 25 years, then the period during which you would have to earn the compensation, which is generally 12 consecutive months, would extend to 36 months.

Want to know more than just your monthly CalSTRS Benefit?


Rick Hughes
(408) 802-6122

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