Retirement Benefits

How Much Does Your Retirement Age Matter?

The key to maximizing your retirement benefit is to understand how your age, service credit, and final compensation are used to determine your monthly pension benefit. Once you retire, your benefit is payable to you for life.

Basic Retirement Calculation - Service Credit x Benefit Factor x Final Compensation = Highest Pension Benefit

Your retirement benefit is calculated using a formula with three factors: service credit, benefit factor, and final monthly compensation.

Your Retirement Age Affects Your Retirement Benefit

Your benefit factor, the percentage of pay to which you are entitled to for each year of service, is also commonly known as “age factor.” It’s determined by your age at retirement along with your employer-contracted retirement formula based on your membership date.

Delay the age you retire, and you’ll increase your overall retirement benefit.

The minimum service retirement age for most members is 50 or 52 with five years of service credit. Once you reach your eligible retirement age, your benefit factor increases every “birthday quarter,” or every three months from your birthday, up to the maximum age determined by your retirement formula. For example, if your birthday is March 10, your birthday quarters are:

  • Birthday – March 10
  • ¼ year – June 10
  • ½ year – September 10
  • ¾ year – December 10

So, retiring on or after your next birthday quarter could mean a greater benefit factor.

Example Benefit Factor – State or School 2% at 55

Age Birthday Year ¼ Year  ½ Year  ¾ Year
55  2.000%  2.016%  2.032%  2.048% 

To find your benefit factor for each quarter year of age, view your benefit factor chart.

Are you still unsure of your earliest retirement age or CalPERS benefit factor? Find information on the home page of your myCalPERS account or check with your employer.

Your Benefit Factor Doesn’t Increase Indefinitely With Age

A common misconception is that your retirement benefit will increase indefinitely with age. All retirement formulas have a maximum age factor ranging from ages 50 to 67. Once you reach the maximum, your benefit factor won’t increase. If you’re still working, you can continue to accrue service credit and increase your final compensation, which will in turn increase your pension benefit.

6 Factors to Consider If You’re Thinking of Retiring Early

  1. Early retirement will decrease your CalPERS retirement benefit.
  2. You’ll require a significantly greater savings, and your investments will have less time to grow.
  3. To qualify for health/dental in retirement, you must retire from a benefit eligible position within 120 days of separation and meet the vesting requirement, typically ranging from 5-20 years. If you don’t know what your vesting requirement is, be sure to check with your employer.
  4. If you’re planning on using Medicare, you won’t qualify until you reach age 65.
  5. If you’re eligible for Social Security and you stop working before receiving benefits with less than 35 years of earnings, your benefit amount is affected.
  6. Postponing taking Social Security until age 70 (depending on the year you were born) can make your monthly benefit 32% larger than it will be at your full retirement age.

Ultimately, choosing your retirement age depends on your personal needs and circumstances. Before deciding, make sure you have the financial resources you need to make the most of this new stage of life. View our Planning Your Financial Future series on YouTube to help you prepare.