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About the CalPERS 2.5% at 55 Plan

Rollover 457 to IRA account

CalPERS retirement formula is determined by the following:

Years of Service X Benefit Factor = Percentage of Original Salary as the Retirement Benefit

The benefit factor goes up to a maximum of 2.5 when you reach age 55.

  • If you retire at age 50, the benefit factor is 2.0.
  • At age 51, the benefit factor is 2.1.
  • At age 52, the benefit factor is 2.2.
  • At age 53, the benefit factor is 2.3.
  • And at age 54, the benefit factor is 2.4.

These numbers are further divided by the number of calendar quarters since your birthday. For example, if your birthday is March 15th, you get another 0.025 added to your benefit factor if you wait until June 15th to retire.

So let’s use an example. Sally makes $35,000 per year. Her public employer uses the 2.5% at 55 retirement formula. At age 54, she has worked 25 years at her public employer and is ready to retire.¬† Her benefits will be:

Years of Service X Benefit Factor = Percentage of Original Salary as the Retirement Benefit

25 years of service  X 2.4 benefit factor at age 54 = 62.5% of her salary of $35,000, which is $21,000 per year, or about $1,750 per month.

With the 2.5% at 55 plan, your retirement benefit increase after age 55 slows down due to reaching the maximum benefit factor. Instead of continuing to work at your public sector employer, you may want to consider retiring and taking a part time job to make up the difference. Or you can get another full time job while drawing on your CalPERS retirement benefits.

Here is a PDF with the full 2.5% at 55 plan for miscellaneous members.