Answers to questions you may have

Your CalSTRS pension is a great benefit, but for many people, it simply won’t provide enough money to meet their retirement income needs.

You can invest in an IRA, or invest on your own, or participate in your workplace 403(b) plan. The 403(b) plan provides tax and other advantages that can give you a much better chance for success.

Named after the IRS tax code section that defines it, a 403(b) plan is an employer-sponsored retirement plan for people who work in public education or for some 501(c)3 non-profit organizations. A 403(b) is like a 401(k) plan which is available to people who work for private sector companies.

When you save in your 403(b) plan, you generally have the option to contribute to your account each pay period on a pre-tax or post-tax basis (also called Roth). Pre-tax contributions are not taxed in the year you earned the money nor on money your investments may earn over time. You pay taxes when you withdraw money from your account later in life.

If you contribute to your plan on a post-tax basis (Roth), you pay taxes on your income as you ordinarily do each year. The amount your account grows to over time including earnings may be withdrawn from your account at retirement tax free.

The money you invest is not subject to vesting. It’s your money. That said, it’s meant for long-term savings and provides special tax benefits. If you need to withdraw money from your account before retirement, the distribution may be subject to tax and early withdrawal penalties. There are special circumstances including health emergencies and natural disasters when these penalties may be waived. Your financial advisor can explain more based on your situation.

Probably not. If you’ve worked for less than 10 years in a job(s) where you’ve paid Social Security taxes, you will receive NO Social Security benefit. And even if you’ve worked 20 years paying Social Security, you will only receive about 40% of your Social Security Benefit. As you can see, you’ll need to save on your own to make up for Social Security.

If you can,

• Begin by contributing 7% of pay which is roughly the amount to replace your Social Security benefit since this is reduced or eliminated based on your participation in CalSTRS.
• If you’re over age 40, bump this up to 10% or more as you have fewer years to accumulate savings.
• If you’re 25 to 30 and just starting out, save what you can… start at 3 to 5% and make a goal to increase your contribution rate 1% each year until you are contributing 10% of pay. It could make a huge difference in your future.

Yes, there is a small fee charged for administrative and investment services. The fee is calculated on your total account balance and is deducted from your account. We always make the fee clear on your statement. 

Absolutely. Our team of financial advisors are here to answer your questions and help guide you. Simply click on the Contact page to get in touch.

It’s easy. Simply click on the “Enroll Now” button and you will be taken through our easy, online process. You’ll be on your way to a more secure and comfortable retirement.