CalSTRS 2% at 60 vs. 2% at 62

How the structure is assigned

CalSTRS generally places members first hired for creditable service on or before December 31, 2012 in the 2% at 60 structure. Members first hired on or after January 1, 2013 are generally in 2% at 62, subject to concurrent-retirement details.

The label describes the standard age factor, not a promise that every member retires at that age or receives exactly two percent.

Eligibility and age factors

A 2% at 60 member can generally retire at 55 with five years, or at 50 with at least 30 years. A 2% at 62 member generally must be at least 55 with five years. Age factors rise with age and can reach 2.4 percent at different ages.

The 2% at 60 structure may include a career-factor enhancement for qualifying members with 30 years. The 2% at 62 structure does not include that career factor.

Final compensation differences

Qualifying 2% at 60 members with at least 25 years can use a highest 12-consecutive-month compensation period. The 2% at 62 structure generally uses the highest 36 consecutive months and does not receive the one-year enhancement.

Compare the structures side by side

The structure is generally determined by the date a person first performed creditable service. Members first hired on or before December 31, 2012 are generally in CalSTRS 2% at 60; members first hired on or after January 1, 2013 are generally in 2% at 62. Prior public retirement membership and concurrent-retirement rules can affect classification, so the Retirement Progress Report is the authoritative starting point.

The label describes the age at which the standard age factor reaches two percent. It does not mean every 2% at 60 member must retire at 60 or that every 2% at 62 member receives exactly two percent. The age factor changes with retirement age and reaches a maximum of 2.4 percent at different ages.

Age factor changes the value of each service year

The CalSTRS formula multiplies service credit by the age factor and final compensation. At a 2.0 percent factor, 25 years equals 50 percent of final compensation before other adjustments. At a 2.4 percent factor, the same 25 years equals 60 percent. Waiting can therefore add service and raise the factor simultaneously.

Use the factor for the exact retirement age in years and completed calendar quarters. A birthday alone may not capture the applicable factor step. Compare official estimates using the actual proposed retirement dates rather than rounding age to the nearest whole year.

Final compensation can change the comparison

Qualifying 2% at 60 members with at least 25 years of service can generally use their highest 12 consecutive months of compensation earnable. Other 2% at 60 members and 2% at 62 members generally use a 36-month period under the applicable rules.

A one-year average can react more strongly to late-career salary changes than a three-year average. However, compensation earnable and creditable compensation have technical definitions. Do not substitute a final pay stub or include a stipend without confirming how CalSTRS treats it.

Choose a date with complete estimates

Model at least the earliest eligible date, the age at which the factor reaches two percent and the age at which the factor reaches its maximum. For each, record service credit, age factor, final compensation and any enhancements on the same worksheet.

Also account for the income earned by continuing to work and the pension payments forgone while waiting. The largest monthly benefit is not automatically the best lifetime decision, but a lower early benefit should not be chosen without understanding the permanent factor difference.