The DBS Account Decision Nobody Walks You Through
If you have worked extra-pay assignments like coaching, club advising, or summer school, you have been building up a separate account alongside your pension called a Defined Benefit Supplement, or better known as a DBS account. This is a secondary, cash-balance retirement account.
Depending on the size of your balance you generally have three options when you retire. A lump-sum payout where you cash out the entire balance. A rollover where you transfer the funds directly into a traditional IRA or another eligible retirement account. Or an annuity payout where they pay you a fixed amount typically over a 3 to 10 year period.
You may also be encouraged to roll that money into something called CalSTRS Pension2. Quick side note: CalSTRS Pension2 actually has nothing to do with your CalSTRS pension. A company that shall not be named bought the naming rights, but that is a story for another time.
I walk every client through what they actually have, what their real options are, and what makes sense for their specific situation.
The Survivor Benefit Question
This is one of the most consequential decisions you will make at retirement and it deserves a real conversation, not a checkbox on a form.
The Member-Only benefit gives you the highest possible monthly payment for your lifetime. But when you pass away those payments stop. Your spouse receives nothing from the pension going forward.
To protect your spouse you can elect a reduced benefit during your lifetime. CalSTRS offers options that continue paying your spouse either 50% or 100% of your benefit after you are gone. The tradeoff is a permanently lower monthly check for as long as you live.
Neither choice is automatically right. It depends on your health, your age, your spouse's financial situation, and what other assets you have.
"There's a strategy called pension maximization that can sometimes let you take the higher Member-Only benefit, protect your spouse anyway, and still come out with more lifetime income than either option alone."
Learn more about Pension Maximization →
Social Security and the Fairness Act
As a CalSTRS member you don't pay into Social Security through your teaching job which means you don't earn Social Security benefits from it either.
But if you worked other jobs before or during your career and paid into Social Security those credits are yours. And as of January 2025 they are worth more than they have ever been.
The Social Security Fairness Act signed into law in January 2025 eliminated two longstanding provisions called the Windfall Elimination Provision and the Government Pension Offset. With both now gone teachers who paid into Social Security through other work can receive their full benefit. Spouses of teachers who were previously seeing their spousal or survivor benefits drastically reduced are now entitled to the full amount, in some cases over a thousand dollars a month that simply wasn't there before.
If this applies to you it is worth a conversation sooner rather than later.
Your 403(b) and 457(b)
For most teachers, the 403(b) is how you build retirement assets beyond your pension. It's also the account they understand the least.
The 403(b) Wild West
Unlike a 401(k) at a private company, there is no single retirement plan for your district. School districts are required by law to let a long list of approved vendors sell products directly to their employees, and many districts have dozens of them on the approved list, each offering completely different investments, share classes, and fee structures.
Some of what is available is straightforward and low-cost. Some of it is a variable annuity wrapped in a surrender charge schedule that will cost you thousands of dollars to unwind early. There is rarely anyone at the district checking which is which, and the person who sold it to you during a lunch break may not have owed you a fiduciary duty at all.
That doesn't mean you should avoid the 403(b). It's still one of the best tools you have, but it's a reason to actually look at what you're paying.
Your 457(b) Option
If your district also offers a 457(b) plan, you can contribute to it in addition to your 403(b), maxing out both accounts independently in the same year. That is a meaningful amount of additional tax-advantaged savings stacked on top of your pension.
The 457(b) has one underrated advantage most teachers never hear about: once you separate from your employer, you can withdraw from it at any age without the early withdrawal penalty that applies to most retirement accounts. If you're considering retiring before 59½, that makes the 457(b) an actually useful bridge.
And if you are 50 or older you can make additional catch-up contributions above the standard limits on both accounts. If you are between 60 and 63 a newer provision called the super catch-up allows you to contribute even more during those specific years.
Where your money actually sits matters. When we manage a client's investment accounts, those assets are held at Fidelity, an independent third-party custodian, not with Pace Financial directly. That means we can manage your investments but never take custody of your money ourselves, and you always have direct access to your own accounts through Fidelity, separate from our advice.
I review what you have, show you what it's actually costing you, and help build a strategy that works. If you haven't looked at your 403(b) fees in a while, that's usually the conversation that ends up mattering most.
Get the free 403(b) fee audit guide →
Social Security and the Fairness Act
As a CalSTRS member you don't pay into Social Security through your teaching job which means you don't earn Social Security benefits from it either.
But if you worked other jobs before or during your career and paid into Social Security those credits are yours. And as of January 2025 they are worth more than they have ever been.
The Social Security Fairness Act signed into law in January 2025 eliminated two longstanding provisions called the Windfall Elimination Provision and the Government Pension Offset. With both now gone teachers who paid into Social Security through other work can receive their full benefit. Spouses of teachers who were previously seeing their spousal or survivor benefits drastically reduced are now entitled to the full amount, in some cases over a thousand dollars a month that simply wasn't there before.
If this applies to you it is worth a conversation sooner rather than later.