How Old Do You Have to Be to Retire in California?

Federal Social Security Retirement Ages

Understanding the age requirements for Social Security benefits is a primary consideration for many individuals planning their retirement. The Social Security Administration (SSA) defines specific ages for receiving different levels of benefits, which depend on an individual’s birth year. These age milestones include early retirement age, full retirement age (FRA), and the age at which delayed retirement credits cease to accumulate.

Individuals can begin receiving Social Security retirement benefits as early as age 62. However, claiming benefits at this early retirement age results in a permanent reduction of the monthly benefit amount. The reduction percentage varies based on how many months before their full retirement age an individual begins receiving benefits. For example, claiming at age 62 when the FRA is 67 can lead to a benefit reduction of approximately 30%.

The full retirement age (FRA) is the age at which an individual becomes eligible to receive 100% of their primary insurance amount (PIA). For those born in 1943 through 1954, the FRA is 66. It gradually increases for subsequent birth years, reaching 67 for individuals born in 1960 or later.

Delaying the claim for Social Security benefits beyond the full retirement age can result in an increased monthly benefit through delayed retirement credits. These credits add a percentage to the monthly benefit for each month benefits are delayed past FRA, up to age 70. The annual increase for delayed credits is 8% for those born in 1943 or later.

Beyond individual retirement benefits, Social Security also provides benefits for spouses and survivors, with age playing a significant role in eligibility. A spouse can claim benefits based on their partner’s earnings record as early as age 62, though this also involves a reduction if claimed before their own full retirement age. A widow or widower can claim survivor benefits as early as age 60, or age 50 if disabled, with full benefits available at their full retirement age for survivor benefits.

California Public Employee Retirement Systems

For many public employees in California, retirement planning involves state-administered pension systems, such as the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). These systems establish distinct age requirements and benefit calculation formulas that differ significantly from federal Social Security rules or private retirement accounts. Eligibility for retirement and the amount of benefits received are tied to factors like the employee’s hiring date, years of service, and the pension plan tier.

CalPERS, which serves state, local government, and school employees, has varying age requirements based on membership date. For “classic” members hired before specific dates, the normal retirement age might range from 50 to 55, depending on their employer’s contract and benefit formula. “New” members, generally those hired on or after January 1, 2013, under the Public Employees’ Pension Reform Act (PEPRA), typically have a normal retirement age of 62 or 67, depending on their specific plan and employer. Early retirement options are available in CalPERS, often as early as age 50, but typically result in a reduced benefit amount for each year retirement precedes the normal retirement age.

CalSTRS, which covers public school educators, has different age provisions based on membership. For CalSTRS “classic” members, the normal retirement age is generally 60, provided they have at least five years of service credit. “New” members under PEPRA, similar to CalPERS, face a normal retirement age of 62. Both systems utilize a benefit formula that considers the member’s age at retirement, years of service credit, and final compensation.

Benefit calculation within these systems is complex, using formulas like “age factor x years of service x final compensation.” The “age factor” increases with age up to the normal retirement age. While early retirement is an option in both CalPERS and CalSTRS, typically available at age 50 or 55 with a minimum number of service years, it leads to a permanently reduced monthly allowance. Employees should consult their specific plan documents and work directly with CalPERS or CalSTRS to understand their specific age requirements and benefit projections.

Accessing Private Retirement Accounts

Beyond government-sponsored programs, many individuals accumulate retirement savings through private accounts like 401(k)s and Individual Retirement Accounts (IRAs). Accessing funds from these accounts without penalty involves age-related rules set by federal tax law. Penalty-free withdrawals from qualified retirement plans and IRAs are generally allowed at age 59½.

Distributions taken from 401(k)s or IRAs before the account holder reaches age 59½ are generally subject to a 10% early withdrawal penalty, in addition to being taxed as ordinary income. However, the Internal Revenue Code provides exceptions to this 10% penalty for those younger than 59½.

One common exception is the “Rule of 55,” which applies to 401(k)s and similar employer-sponsored plans. If an employee leaves their job in the year they turn 55 or later, they may be able to take penalty-free withdrawals from that employer’s plan. This rule does not apply if the employee separates from service before age 55, even if they wait until 55 to withdraw, nor does it apply to IRAs.

Other exceptions to the 10% penalty include distributions made due to total and permanent disability, unreimbursed medical expenses, or distributions made as part of a series of substantially equal periodic payments (SEPP). Regardless of the exception, withdrawals are still subject to ordinary income tax.

Required Minimum Distributions (RMDs) are another age-related rule for private retirement accounts. The SECURE 2.0 Act increased the RMD age to 73, and eventually to 75. Account holders must begin taking annual withdrawals from their traditional IRAs, 401(k)s, and similar plans once they reach this age to ensure taxes are eventually paid on the deferred income. Failure to take the RMD can result in a penalty.