Retirement Planning in Your 20s

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As a young educator, you probably have lots of demands on your salary. You may be paying off student loans, saving money for a new car and trying to furnish your first apartment. With retirement decades away, it's easy to push off saving for it. But if you start saving at a young age, you have a lot to gain – thousands, if not hundreds of thousands of dollars – with the benefits of time and compounding interest. Use this checklist to put your savings to work for a rewarding retirement.

  • Learn about your CalSTRS or CalPERS retirement benefits. You’ll find links to benefits counseling, workshops, benefits calculators and more at and
  • Attend the "Demystifying CalSTRS" workshop.
  • Sign up for your 403(b) or 457 retirement savings plan if you haven't already. Contact your district administrator for enrollment materials.
  • Do a ballpark estimate to find out how much you need to save for retirement. Most educators find they need to replace 90% to 100% of their pre-retirement income to maintain a comfortable lifestyle in retirement – even more if retiree medical insurance is not available through your district. Your CalSTRS or CalPERS pension benefit may not provide you with enough money to maintain your pre-retirement lifestyle
  • Use the How Much Can I Save in My 403(b) or 457 Plan Calculator on this site.
  • Use the information on this site to learn more about your investing options.
  • Contribute as much as you can to your 403(b) or 457 plan. This is an ideal time to invest for your future, no matter how big or small the amount. You have time on your side, and even the modest amount of money you save early on can add up to a comfortable nest egg years from now. The average age of a CalPERS retiree is 60 years; the average CalSTRS retiree is 61.3 years. Start now and you have many decades to build up your retirement savings. You  may also want to consider opening an individual retirement account (IRA).
  • Rebalance your investments regularly. Rebalancing can help ensure that your portfolio matches your timeline, goals and risk tolerance. Rebalancing (adjusting the percentage of your portfolio invested in stocks, bonds or other investment products) helps keep your nest egg growing.
  • Learn more about life and disability insurance. Find out if life and disability insurance are offered through your district and determine your appropriate level of coverage. Looking ahead, life insurance needs may be reduced in retirement, but you may benefit by locking in lower rates while you're in good health.

Savings Grow Faster with Tax-Deferral

The chart compares a taxable account with a tax-deferred account. The amount invested is the same ($50 a month), and the annual rate of return is the same (6%). The only difference is that the taxable account figures in an annual 33% combined federal and state income tax rate, while the 403(b) account grows tax-deferred.*

* Return shown is for illustration only and does not represent the return of any actual investment. Your results will vary. Taxes will be due upon withdrawal. Distributions before age 59½ (age 55 upon separation from service) may incur a 10% tax penalty. Penalty does not apply to 457 plans.