At What Age Can You Retire in California?

Retirement is a significant life transition with various financial implications, and the age at which one can retire is not a singular, fixed number. It is a multifaceted concept influenced by different benefit programs and personal financial situations. For individuals in California, understanding these “retirement ages” involves federal benefits like Social Security, state public employee pensions, and rules governing personal retirement savings. There is no universal “California retirement age,” but rather age-related milestones tied to different income streams.

Social Security Retirement Ages

Social Security benefits are a foundational component of retirement income for most Americans, including those residing in California. Individuals can begin claiming Social Security retirement benefits as early as age 62. However, claiming benefits at this early age results in a permanent reduction of the monthly benefit amount compared to what would be received at full retirement age (FRA).

The full retirement age (FRA), also known as normal retirement age, is the age at which individuals receive 100% of their primary insurance amount. This age is determined by the individual’s birth year. For those born in 1960 or later, the full retirement age is 67.

| Birth Year | Full Retirement Age |
| :——— | :—————— |
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960+ | 67 |

Individuals can also delay claiming Social Security benefits past their full retirement age, up to age 70. For each month benefits are delayed beyond FRA, the monthly payment increases through delayed retirement credits. This can lead to a larger monthly benefit. These Social Security age rules are federal, applying uniformly across the United States.

California Public Sector Retirement Systems

Beyond federal Social Security, public employees in California participate in state-level retirement systems with their own specific age and service requirements. The two primary systems are the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). These systems provide defined benefit pensions based on factors such as years of service credit and age at retirement.

For CalPERS members, the minimum retirement age can vary, generally ranging from 50 to 52 years, depending on the specific retirement formula and the employee’s hire date. Most members need at least five years of service credit to be eligible for a monthly benefit. If all service credit was earned on or after January 1, 2013, the minimum retirement age is 52.

CalSTRS, designed for public school educators, allows retirement as early as age 55 with at least five years of service credit. Members under the CalSTRS 2% at 60 formula may also retire at age 50 with at least 30 years of service credit.

Local public agencies across California, such as city or county governments and specific fire or police departments, may also operate their own distinct retirement plans. These local systems often have varying age and service requirements. Individuals should consult the rules of their specific employer’s retirement plan.

Accessing Personal Retirement Accounts

Accessing funds from personal retirement accounts, such as 401(k)s, Individual Retirement Accounts (IRAs), and 403(b)s, involves specific age-related rules set by federal tax law. The standard age for penalty-free withdrawals from most qualified retirement plans is 59½. Distributions taken before this age are subject to a 10% early withdrawal penalty, in addition to ordinary income taxes.

Several exceptions to the 59½ rule permit earlier withdrawals without incurring the 10% penalty. These include:

• Separation from service at age 55 or later for certain employer-sponsored plans (known as the Rule of 55)
• Withdrawals due to disability
• Distributions for unreimbursed medical expenses
• Payments made as part of a series of substantially equal periodic payments (SEPP)

Another age milestone for retirement accounts is the beginning of Required Minimum Distributions (RMDs). Individuals must begin taking RMDs from traditional IRAs and employer-sponsored retirement plans by age 73. Failure to take RMDs can result in a penalty, typically 25% of the amount that should have been withdrawn. These age rules are federal regulations, applying to all U.S. citizens, including those in California.

California State Taxation of Retirement Income

California’s state income tax treatment of retirement income can significantly impact a retiree’s financial landscape. California does not tax Social Security benefits, which can provide a substantial tax advantage for individuals whose primary retirement income source is Social Security.

However, California does tax distributions from other common retirement income sources. Income from pensions, 401(k)s, IRAs, and other private retirement plans is subject to California state income tax. Withdrawals from these accounts are added to an individual’s taxable income and are subject to the state’s progressive income tax rates.

California does not impose a state estate tax. Property taxes, while not directly tied to retirement income, are relevant for retirees who own homes in California. California’s Proposition 13 limits property tax increases to a maximum of 2% per year based on the assessed value, providing stability for long-term homeowners.