- Know your retirement needs.
Experts estimate that you’ll need about 80% of your pre-retirement income—lower wage earners may need 90% or more—to maintain your standard of living when you stop working.
- Learn about your CalPERS retirement benefits (and those of other employers you may have had).
It’s important to review your Annual Member Statement we provide each year to make sure that all your covered service is being counted (log in to myCalPERS to view your current and past statements). You should use our Retirement Estimate Calculator on our website or through your myCalPERS account to see how your benefits change when you select different retirement dates. Maybe you can retire early, or perhaps you’d benefit from working an extra year or two. Add in benefits from past employers, and you’ll be able to determine the additional savings you’ll need in order to retire when you want.
- Know your Social Security benefits.
Each year you should check your Social Security Statement, which shows a record of your earnings and an estimate of your future benefits. You can get your personal Social Security Statement online by using your my Social Security account. If you worked for a federal, state, or local government where you did not pay Social Security taxes, the pension you receive from that agency could reduce your Social Security benefits. Visit the Social Security & Your CalPERS Pension page to see the relationship between the two benefits. Remember, not everyone gets “full” benefits from Social Security. If you are planning to retire early, you may need other sources of income.
- Assess all previous sources of retirement income.
Learn what benefits you may have from previous employment—in either the public or private sector. File all of the information in one place for easy reference, and be sure to have updated contact information so you know who to call with any questions or to learn of changes in requirements or laws.
- Maximize your annual contributions to a deferred compensation savings plan.
Over time, deferral of taxes and compounding of interest make a big difference in the amount of money you can accumulate. Automatic deductions can make it easy. If you’re not yet in this kind of savings plan, check out what’s available to you. State employees can participate in 401(k) or 457 plans through CalHR’s Savings Plus Program. For public agency or school employees, ask your employer if they participate in the CalPERS 457 Plan.
- Put money into an Individual Retirement Account.
Save money in an Individual Retirement Account (or a Roth IRA) and delay paying taxes on investment earnings until retirement age. If you don’t have a retirement plan (or are in a plan and earn less than a certain amount), you can also take a tax deduction for your IRA contributions.
- Don’t touch your savings.
Don’t dip into your retirement savings. You’ll lose principal and interest, and you may lose tax advantages. If you change jobs, roll over your retirement savings directly into an IRA or to your new employer’s retirement plan.
- Start now, set goals, and stick to them.
Start early. The sooner you start saving, the more time your money has to grow. Put time on your side. Make retirement saving a high priority. Devise a plan, stick to it, and set goals for yourself. Remember that it’s never too early or too late to start.
- Consider basic investment principles.
How you save is as important as how much you save. Inflation and the type of investments you make play important roles in how much you’ll have saved at retirement. Know how your pension or savings plan is invested. Financial security and knowledge go hand-in-hand.
- Ask questions.
These tips should point you in the right direction, but you’ll need more information. Watch our Planning Your Financial Future video series. Talk to your employer, your bank, your union, or a financial advisor. Ask questions and make sure the answers make sense to you. Get practical advice and act now.