The Secrets Your CalPERS Statement Doesn’t Tell You: A Retiree’s Guide to Overlooked Opportunities
Note: All names and details in the following scenarios have been changed for privacy. These stories are for illustrative purposes only and should not be considered advice or an indication of potential outcomes.
For those new to the California state retirement system, the California Public Employees' Retirement System (CalPERS) stands as the nation’s largest public pension fund, overseeing retirement and health benefits for over 2 million California public employees, retirees, and their families.
From teachers and firefighters to city planners and DMV clerks, CalPERS serves a diverse member base. But despite its scale and importance, many retirees are unaware of key features that could impact their long-term financial well-being.
The Forgotten Formula: Your Pension Isn’t Set in Stone
James Wilson, a retired city planner, initially calculated his pension using the standard formula:
Years of service × Age factor × Final compensation. But he was unaware that unused sick leave and service credit purchases could influence his total benefit.
“Had a colleague not mentioned it during lunch, I might’ve left thousands on the table,” James shared.
What to know: While CalPERS benefits aren’t directly customizable like a 401(k), certain actions — such as purchasing additional service credit — may enhance your pension. These options are subject to strict eligibility rules and should be reviewed with a qualified financial professional.
The Healthcare Relocation Gap
Maria Chen retired from the DMV expecting her health benefits to follow her wherever she went. After moving to Nevada, she was surprised to find that out-of-state health coverage differed significantly from what she had in California.
What to know: CalPERS healthcare options can be geographically sensitive. Your post-retirement location may affect your network availability, plan options, and premiums.
Survivor Benefits: A Critical, Often Misunderstood Election
Robert and Linda Thompson assumed that if something happened to Robert, Linda would automatically receive his full pension. During a pre-retirement seminar, they learned that survivor benefits require a formal election at retirement — and that the choices made are typically irrevocable.
What to know: If you want to ensure continued benefits for a spouse or loved one, you must proactively select a survivor option. These decisions often involve a trade-off in monthly payout and should be reviewed in context of your family and financial goals.
Cost-of-Living Adjustments (COLAs): Helpful, but Capped
Patricia Anderson assumed her pension would always keep pace with inflation. But CalPERS COLAs are subject to annual caps, meaning high inflation periods can erode purchasing power over time.
What to know: While CalPERS offers inflation protection, it may not fully shield you from rising living costs. Supplemental retirement savings may be necessary to preserve your lifestyle in later decades.
Working After Retirement: Know the Rules
David Cooper, a retired civil servant, was offered part-time consulting work with a local agency. What he didn’t realize: CalPERS has strict rules about post-retirement employment with CalPERS-covered employers. Violations can result in suspension of your pension.
What to know: CalPERS retirees returning to work in a CalPERS-covered position must comply with hours restrictions and employment classifications. Always consult CalPERS or a fiduciary advisor before accepting post-retirement work.
Sustainable Investing Awareness
Lisa Ramirez was passionate about ESG (Environmental, Social, Governance) investing but assumed she had no control over her pension’s strategy. Then she discovered that CalPERS manages a Sustainable Investment Program as part of its broader portfolio.
What to know: While individual members cannot direct their CalPERS pension investments, understanding CalPERS’ ESG policies can help align your supplemental investments with your personal values.
Divorce and Community Property Considerations
Michael Santos assumed a standard divorce decree would be enough to divide his pension fairly. Unfortunately, CalPERS has specific legal requirements for community property settlements that differ from typical retirement accounts.
What to know: CalPERS benefits require a Qualified Domestic Relations Order (QDRO) or a similar structure approved by CalPERS. Generic legal templates may not meet the necessary standards and could delay or reduce benefits.
Planning Beyond the Pension: Do You Have an Income Gap?
These scenarios reveal one powerful truth: understanding CalPERS is only part of the retirement equation. Ensuring your income supports your desired lifestyle is another.
That’s why we created our Income Gap Calculator – a tool designed to help retirees determine whether their pension, Social Security, and savings are enough to sustain their retirement goals.
Illustrative Scenarios:
Modest Lifestyle (~$3,000/month gap)
- Domestic travel twice yearly
- Maintain current home
- Local entertainment & hobbies
- Medicare supplement plan
Comfortable Lifestyle (~$5,000/month gap)
- One international and multiple domestic trips per year
- Minor home upgrades
- Dining out and golf membership
- Comprehensive healthcare coverage
Luxury Lifestyle (~$8,000/month gap)
- Multiple international vacations annually
- Vacation home or major remodel
- Country club membership
- Premium healthcare with long-term care coverage
These examples are hypothetical and for illustrative purposes only. They do not reflect actual client outcomes or recommendations.
Next Step: Map Out Your Retirement Strategy
Don’t let small oversights today turn into major regrets tomorrow. Use our Income Gap Calculator to explore your unique retirement needs. Then explore our Retirement Encyclopedia, where you’ll find deeper guidance on maximizing CalPERS benefits, supplemental savings strategies, and how to evaluate fiduciary advisors.
Important Disclosures
Whalen Financial is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Whalen Financial and its representatives are properly licensed or exempt from licensure. For more information, please refer to our Form ADV.
This content is for informational and educational purposes only and should not be construed as personalized investment or legal advice.
The examples used are hypothetical and do not reflect actual client experiences or outcomes. Individual results will vary.
Whalen Financial is not affiliated with or endorsed by CalPERS. The views expressed are those of the author and do not reflect official policy of CalPERS or the State of California.
Want Help Navigating Your CalPERS Benefits?
Schedule a complimentary call with a fiduciary advisor who understands both public pensions and private planning. Your retirement deserves more than just a formula — it deserves a plan tailored to your life.
