Teachers have unique challenges with planning for retirement. If you’re working for a public school, you’re probably eligible for a defined benefit plan or pension. You may also contribute to a 403(b) to boost your retirement. However, a significant amount of teachers don’t pay into the Social Security system and are therefore ineligible for Social Security retirement benefits.
We’re here to help you navigate your teacher retirement plans to ensure you can live the lifestyle you want when you retire. Our financial advisors can help you understand and manage your pensions and ensure you’re saving enough to cover your living expenses.
There are some differences between STRS and PERS. For example, if you’re a full-time employee covered under the CalPERS plan, enrollment is mandatory, starting on the first day of employment. Enrollment in CalSTRS is optional, but it also provides disability and survivor benefits for California public school educators.
If you switch jobs, you can enroll in the new retirement system, but you can also decide to keep both retirement accounts. We can help you determine what the best option is for your situation.
CalSTRS and CalPERS can provide a decent income during retirement, especially if you’ve worked as a teacher for over 30 years. You may be eligible for longevity bonuses, and your benefits are calculated based on the highest earning 12 months of service. However, even under the best of circumstances, you can’t expect your teacher’s pension to replace your full income.
To replace your income, you want to invest some of your earnings into a 403(b), which is a defined contribution plan, much like a 401(k) for the public sector. We can help you manage your 403(b), minimize your risks, and optimize your 403(b) portfolio for you. We can also create a retirement income distribution plan to ensure you can have the lifestyle you want in retirement.
PERS and STRS plans are defined benefit plans. They calculate your benefits based on years of service, age, and salary. CalSTRS plans also provide disability and survivor benefits besides retirement benefits.
When you switch employers, you’re able to move your retirement funds to the new plan. You can also use 403(b) rollovers to move your defined contribution plan. As retirement planners, we can help you make the best decision and educate you on how and when you can merge your retirement funds.
To retire before age 55, you must have worked as a teacher for 30 years. Otherwise, you have to work a minimum of 5 years to be eligible for retirement distributions. Your benefits increase with years of service, age, and rise in salary. Most people can’t retire on CalSTRS and CalPERS alone, but they also need other income, such as from a 403(b). We can help you calculate what your retirement income would be to decide when you can retire from teaching.
How much you need to live on during retirement depends on your cost of living and your retirement age. Most people have to supplement their retirement income from CalSTRS and CalPERS with 403(b) distributions and other savings. To figure out how much you need to save to retire comfortably, schedule an appointment with our advisors today.
CalPERS and CalSTRS are retirement plans for teachers and public employees in the state of California. As a teacher, you may be eligible for CalSTRS, which is the California State Teachers’ Retirement System. CalPERS stands for California Public Employees’ Retirement System. Depending on your position, you may be eligible to take part in both plans.
Both retirement plans offer a defined benefit that is calculated using your years of service, age, and final compensation to derive at the benefit amount. CalSTRS and CalPERS are designed to replace your Social Security benefits, but they may still not cover all your expenses in retirement.
We’re here to help you navigate the complexities of teacher retirement plans. Between CalSTRS, CalPERS, and your 403(b), you can use a financial expert to guide your investment decisions and help you prepare for the future. Call us today to schedule an appointment to discuss your retirement plans.
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