Next Wave Options
Independent life insurance and retirement income agency serving Salinas and Monterey County.
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Independent life insurance and retirement income agency serving Salinas and Monterey County.
Get a quote
If you work for the County of Monterey, a city, the state prison system in Soledad, CSU Monterey Bay or another CalPERS employer, your retirement has a floor that most private-sector workers do not: a defined-benefit pension paid monthly for life. It is also the account you have the least control over, which confuses people who are used to 401(k) statements. This page explains what CalPERS provides and what it does not, the decisions you make once and cannot unmake, and how a 457(b), a 403(b), an IRA and Social Security fit around it.
Next Wave Options is not affiliated with CalPERS or with any CalPERS employer. Everything mechanical on this page is summarized from CalPERS's own retirement benefits pages, which are the authority; confirm your own figures with CalPERS before making any decision, and we will never suggest leaving a public plan.
CalPERS pays a monthly retirement benefit calculated by a formula that uses your years of service credit, your age at retirement and your final compensation, with the formula itself depending on your employer's contract and when you became a member. The benefit is funded by contributions from you and your employer during your working years and is paid for life once you retire. It is not an account balance: there is no lump sum sitting with your name on it, which is why the pension itself generally cannot be rolled over into an IRA or anything else. CalPERS publishes the formulas and a calculator for your own estimate; use those numbers, not anyone's rule of thumb.
County and city employees can contribute to a governmental 457(b), such as the Monterey County Deferred Compensation Plan. This is money you control. When you leave service you can leave it in the plan, take payments, transfer it to another governmental 457(b), or roll it into an IRA. Money that originated in the 457(b) is generally not subject to the additional 10 percent tax before 59½; a rollover into an IRA gives that up, so for someone retiring at 55 or 58 with a CalPERS pension, leaving the 457(b) in place or drawing from it directly is often the better sequence. Our County of Monterey 457(b) page explains the choices.
Some CalPERS employers, including school districts for classified staff and some public colleges, offer a 403(b) as well. It has rollover options when you leave, with the caveat that annuity-based contracts can carry surrender charges. See 403(b) rollover options.
Many public employees have a 401(k) or IRA from private-sector years. Those follow their own rules, explained on our 401(k) rollover options and IRA rollover pages; nothing about a CalPERS pension changes them.
Whether your CalPERS-covered job paid into Social Security depends on your employer's arrangement; many county and city positions do, and some do not. How a public pension interacts with any Social Security benefit you earned elsewhere is governed by federal rules that the Social Security Administration states and applies to your own record; check its current statement before planning around it.
The income planning worksheet lists the bills that must be paid for life on one side and the income guaranteed for life on the other. For a CalPERS retiree the guaranteed side starts strong: the pension, chosen with the survivor option that fits the household, plus Social Security where it applies. If that covers the essentials, the 457(b) and any IRA can stay flexible, which is where they are most useful, and no contract needs to be bought. If a gap remains, and only then, part of the 457(b) or IRA might be assigned to a contract that pays for life, with its surrender charges, withdrawal limits and, for indexed contracts, caps stated before anything else. Health insurance in retirement, which CalPERS handles for many employers, belongs on the must-pay side and deserves its own line.
Generally no. The pension is a monthly benefit for life calculated by formula, not an account balance. A refund of your own member contributions, if you leave before retiring, can usually be rolled over, but taking a refund generally forfeits the pension. CalPERS's separation documents explain the consequences.
That is a personal decision CalPERS's documents govern and we will not make for you. The unmodified allowance pays the most and ends at your death; other options reduce your benefit to continue a payment to a survivor. We put each option into the income worksheet so the trade-off is in dollars for your household.
Not by default. 457(b) money is not subject to the additional 10 percent tax before 59½; in an IRA it would be. If you retire before 59½ with a CalPERS pension, leaving the 457(b) in the plan or drawing from it directly often works better. Compare fees and options first.
It depends on whether your position paid into Social Security, which varies by employer, and on what you earned elsewhere. Federal rules govern how a public pension and Social Security interact; the SSA's statement for your record is the reliable source.
Yes, with the parts around the pension: reading the options into an income worksheet, the 457(b) and IRA choices, and any insurance contract where one genuinely fits. For the pension itself, CalPERS is the authority and we link to it rather than restate it.
Often not, because the pension already provides lifetime income. Where a gap remains after the pension and Social Security, part of a 457(b) or IRA might reasonably fund a contract that pays for life, with surrender charges, withdrawal limits and caps disclosed first. It should never be the whole balance.
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Schedule a CallReviewed by Roberto Morales, California Insurance License #0G97165. Next Wave Options is licensed for life and annuity products only and does not provide investment, tax or legal advice.
