Capital Wealth · Planning · Retirement Income

403(b), CalSTRS& CalPERS

The three-legged stool for California public employees — and why the leg you fund yourself is the one that decides your lifestyle.

California teachers, school staff, and public employees have a retirement picture most private-sector workers will never see: a defined-benefit pension through CalSTRS or CalPERS, Social Security (for some), and a supplemental 403(b) or 457(b) they fund on their own. Designed together, the three produce a secure retirement paycheck. Designed poorly — especially without the 403(b) — they leave a gap measured in hundreds of thousands of dollars. We design them together.

By Sean Anees Saifi · Capital Wealth · Sources: CalSTRS & CalPERS published benefit schedules; IRS 2026 limits

The pension is guaranteed. Sufficient is a different question.

Key Takeaways

Three legs, not one. Your retirement paycheck comes from the CalSTRS/CalPERS pension, Social Security (CalPERS members usually pay in; CalSTRS teachers generally don’t), and a 403(b)/457(b) you fund yourself.
The pension alone leaves a gap. A full-career pension typically replaces 60–75% of final pay; most households need 80–90%. On a $95,000 salary at 65% replacement, that’s a $28,500/yr gap — about $712,500 of savings at a 4% withdrawal rate.
Your hire date sets your tier. Pre-2013 CalSTRS members hit a 2.0% age factor at 60 (2.4% cap with the career factor); PEPRA hires don’t reach 2.0% until 62 and get no career factor.
2026 limits are generous. $24,500 into a 403(b) plus a separate $24,500 into a 457(b) — they don’t share a limit — with an $8,000 age-50 catch-up and an $11,250 super catch-up at 60–63.
Run the calculator below. It projects your pension at your tier and age, shows the income gap, and computes the monthly 403(b) contribution that closes it.

Most of the retirement anxiety we hear from educators comes from treating the pension as the whole answer. It is a superb foundation — a formula-driven check, for life, guaranteed by the system. But the formula was never designed to replace all of your paycheck, and for CalSTRS teachers there is usually no Social Security underneath it. What’s left is the third leg: the 403(b) or 457(b) you control — the savings rate, the vendor, the funds, and ultimately the size of the gap it closes.

This page holds the whole picture in one place: the official CalSTRS age-factor tables for both tiers, the CalPERS tiers, the arithmetic of the income gap, the 2026 contribution limits, and a calculator that runs your own numbers — pension, gap, and the monthly contribution that closes it — before we ever talk about products.

THE BASICS

Your three retirement income sources

Most California public employees have at least two of these three legs — and should have all three.

Leg 1: Pension (CalSTRS / CalPERS)

Defined benefit. Monthly income for life based on a formula: age factor × years of service × final compensation. Guaranteed by the system.

Leg 2: Social Security

For some California public employees only. Teachers in CalSTRS generally do not pay into Social Security through their teaching income. CalPERS members typically do.

Leg 3: 403(b) / 457(b)

Defined contribution. You control the savings rate, the investments, and the future value. Pre-tax or Roth options available. Designed to fill the income gap pension alone leaves.

CALSTRS

How the CalSTRS pension is calculated

The formula is the same for every CalSTRS member. What changes is your age factor — based on which benefit tier you belong to.

The CalSTRS monthly pension formula:

Age Factor × Years of Service Credit × Final Compensation

Age Factor. A percentage based on your age when you retire. Increases as you age.
Service Credit. Full-time equivalent years you've worked under CalSTRS.
Final Compensation. Your highest 12 (or 36) consecutive months of salary, depending on tier.

CalSTRS 2% at 60 — Pre-2013 hires

Age	Factor
50	1.100%
55	1.400%
56	1.520%
57	1.640%
58	1.760%
59	1.880%
60	2.000%
61	2.133%
62	2.267%
63+	2.400%

Career factor adds 0.2% to the age factor (capped at 2.4%) for members with 30+ years of service retiring at age 60+.

CalSTRS 2% at 62 — Post-2013 hires (PEPRA)

Age	Factor
55	1.160%
56	1.280%
57	1.400%
58	1.520%
59	1.640%
60	1.760%
61	1.880%
62	2.000%
63	2.133%
64	2.267%
65+	2.400%

No career factor. Lower age factors at every age below 62. Requires working longer to hit the 2.0% base factor.

Worked example. CalSTRS member retires at age 60 under 2% at 60, 32 years of service credit, $95,000 final compensation:

2.00% × 32 × $95,000 = $60,800/year ($5,067/mo)

Add a career factor of 0.2% (30+ years) and the factor becomes 2.2% → $66,880/year ($5,573/mo). A CalSTRS pension of this size still leaves most households needing supplemental savings.

CALPERS

CalPERS at a glance

CalPERS covers non-teaching public employees in California — city, county, state, school classified staff, and many special districts. Uses the same age-factor × service-credit × final-compensation formula, with different benefit tiers.

2% at 55 — "Classic" tier

Most pre-2013 hires. 2.0% age factor at age 55, scaling to 2.5% at age 63+. Higher benefit than post-2013 tiers.

2% at 60 — Some legacy

Older CalPERS formula used by certain agencies. 2.0% factor at age 60.

2% at 62 — PEPRA tier

All new hires on/after Jan 1, 2013. Normal retirement age 62. Lower age factors below 62. Minimum retirement age is 52.

Unlike CalSTRS, most CalPERS members pay into Social Security through their work — so their three legs are pension + Social Security + supplemental 457(b) or 403(b) savings. This makes the income picture a bit easier, but the supplemental savings are still essential.

THE GAP

Why a 403(b) is not optional

A CalSTRS or CalPERS pension is designed to replace a portion of your final compensation — typically 60–75% for a full career. Most households need 80–90% to maintain their lifestyle in retirement. A 403(b) or 457(b) fills that gap.

The math of the income gap. Say your final compensation is $95,000 and your pension replaces 65%:

$95,000 × 65% = $61,750/yr pension → Gap = $28,500/yr you still need

To produce $28,500/yr of additional income at a 4% safe withdrawal rate, you'd need about $712,500 in a 403(b) or IRA at retirement. That is typically 20–30 years of steady contributions — which is why starting a 403(b) in your 30s is far easier than starting it in your 50s.

INTERACTIVE

Run your own numbers — CalSTRS + 403(b) calculator

Move the sliders. Everything below recomputes live: your projected pension, the income gap it leaves, and the 403(b) contribution that closes it. Estimates only — verify with your official CalSTRS/CalPERS statement.

1 · Your CalSTRS / CalPERS pension

Benefit tier

Retirement age: 60

Years of service credit: 30

Final compensation (highest avg salary)

I'll also receive Social Security

2 · Your 403(b) / 457(b) plan

Target income replacement: 85% of final pay

Current age: 40

Current 403(b) balance

Monthly contribution: $500

Expected annual return: 6.5%

Pension / year

Income gap / year

403(b) at retirement

403(b) income / yr (4%)

Retirement income vs target

—

2026 LIMITS

What you can put in

2026 contribution limits

Plan Type	Limit
403(b) employee contribution	$24,500
457(b) employee contribution	$24,500
Age 50+ catch-up (each plan)	+$8,000
Age 60–63 super catch-up	+$11,250
15-year service catch-up (403(b))	+$3,000

Limits are indicative — verify current-year IRS limits. 403(b) and 457(b) can be funded simultaneously and do not share a limit.

Key features of 403(b)

Pre-tax contributions	Yes
Roth option	Most plans
Vendor choice	Typically multiple
Loans allowed	Often
In-service rollovers at 59½	Most plans
RMDs begin	Age 73/75

CAPITAL WEALTH STRATEGY

How we design your 403(b) + pension plan

1. Project your pension first

We run your expected CalSTRS or CalPERS benefit at 3 retirement ages (e.g., 60, 62, 65) and use the age-factor tables to show the trade-off.

2. Identify the income gap

Subtract projected pension (and Social Security where applicable) from your target income. That's the dollar figure your 403(b) / 457(b) must produce.

3. Right-size the contribution

We calculate the monthly 403(b) contribution that closes the gap by retirement — at a realistic return assumption stress-tested across market scenarios.

4. Pick the right vendor and funds

Not all 403(b) vendors are equal. Fees, fund menus, and loan features vary widely. We review what's available in your district and recommend accordingly.

5. Layer Roth vs pre-tax

For many public employees, a blend of Roth 403(b) and pre-tax is optimal — especially if you expect Social Security plus pension to push you into a higher bracket.

6. Coordinate with Pension Max

At retirement, we model life-only vs joint-survivor vs Pension Max — your 403(b) can help fund life insurance premiums. Run the calculator →

The Takeaway

The pension formula is fixed; the third leg is not. Find your tier in the tables above, run the calculator with your real salary and service years, and read the gap line. If it isn’t zero, the monthly contribution that closes it is printed right underneath — and starting it in your 30s is a fraction of the cost of starting it in your 50s.

California educators at work in a classroom

Capital Wealth · California Educators

A California classroom at the end of the school day — Capital Wealth · The career behind the pension

Where this fits Bubble Map: Retirement· Bubble Map: Taxes· POLARIS: Step 4 · Align Framework

POLARIS · Step 1 · Personal Approach

Send the statement. We’ll run the projection.

Bring your most recent CalSTRS or CalPERS annual statement to a fifteen-minute Zoom and we’ll run your retirement projection at multiple ages — then model what 403(b) contributions do to the gap, on your numbers rather than the averages above. You’ll leave knowing your tier, your factor, and your monthly figure.

Book the pension review → Compare the 403(b) fund menus →

This page is educational and is not individualized investment, tax, or legal advice. Pension figures use the published CalSTRS and CalPERS schedules; contribution limits are the announced 2026 IRS limits — verify current-year limits and your own benefit estimate with your system before acting. Calculator results are estimates and not a benefit projection. Consult a licensed financial advisor before making investment decisions. Disclosures · Privacy