In Your 60s: The critical decade.

Your 60s are when everything converges. The pension election, Social Security coordination, and sequence of return risk are no longer abstract planning concepts. They are decisions you are about to make, and most of them cannot be undone.

The pension election cannot be undone

When you retire from CalSTRS you have to choose how your pension gets paid out. The Member-Only benefit gives you the highest possible monthly amount for your lifetime. When you pass away the payments stop. Your spouse receives nothing from the pension going forward.

To protect your spouse you elect a reduced benefit. 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.

There is a third option worth understanding. Pension maximization uses life insurance to protect a surviving spouse while you take the higher Member-Only benefit. When done right you end up with more income during your lifetime and your spouse is still protected. When done wrong it is expensive and does not work. We model both scenarios before making any recommendation.

Learn how pension maximization works →

The DBS account decision (CalSTRS members)

If you have worked extra-pay assignments like coaching, club advising, or summer school at any point in your career, you have been building up a Defined Benefit Supplement account alongside your regular pension. This is a secondary cash-balance account and at retirement you will need to decide what to do with it.

Your options are generally a lump-sum payout, a rollover into a traditional IRA or other eligible account, or an annuity payout over a defined period. Each option has different tax implications and fits differently depending on your overall retirement income picture. This is not a decision to make on autopilot at the HR window on your last day.

Super catch-up contributions from 60 to 63

A provision under SECURE 2.0 allows for an enhanced catch-up contribution between ages 60 and 63 on top of the standard limit. This window is specific to those years so if you are in that range and have the cash flow to contribute more, it is worth taking advantage of before the window closes at 64.

Social Security coordination

As a CalSTRS member you do not earn Social Security from your teaching job. 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 eliminated the Windfall Elimination Provision and the Government Pension Offset. If those provisions previously reduced or eliminated your Social Security benefit or your spouse's benefit, that has now changed. In some cases this means over a thousand dollars a month that was not there before.

Even if you knew roughly what to expect, it is worth running the numbers again given the new law. The optimal claiming age and strategy may have changed too.

Sequence of return risk is now a real threat

If you retire in a year when markets drop significantly and you are drawing income from your investment portfolio you can lock in losses that are very hard to recover from. The bucket strategy we use is specifically designed to protect against this.

Your CalSTRS pension is actually one of the best protections against sequence of return risk that exists. It pays every month regardless of what markets are doing. Make sure the rest of your assets are structured to complement that before you retire, not after.

Learn more about sequence of return risk →

Roth conversions in the early retirement window

Once you stop working and your income drops there is often a meaningful tax planning window before Social Security and required minimum distributions push your income back up. This is a prime time to consider converting pre-tax retirement account money into a Roth.

Done carefully over several years this can reduce your future tax burden significantly. Done carelessly it can push you into higher brackets, trigger Medicare premium surcharges, and make your Social Security taxable when it would not have been otherwise. We model this out precisely before making any recommendation.

This decade requires a real plan, not general guidance. Let's build yours.