Pension Sense blog | December 18, 2025 | Melissa Jones-Ferguson

'Tis the season for giving, and here at CalSTRS, we want to make sure you don't forget one very important person this year: your future self.

We're talking about the phenomenon of compound interest. Not familiar with the concept? You're not alone.

First, you need to know that your CalSTRS retirement benefit will generally replace 50% to 60% of your final salary—and that you may need additional income to live comfortably in retirement.

Supplemental retirement savings accounts can help you reach your retirement goals. If you start putting a little aside now in an additional savings account, such as a 403(b) or 457(b) account, it can really grow over time through compound interest.

If you start contributing $100 per month today, using an assumed interest rate of 5%, you could have $1,222.89 after a year, based on the principle of time and compounding.

Compound interest grows not only on the money you put in, but also on the interest your account has already earned.

Use our savings calculator to estimate how much compound interest you can earn, depending on the size of your monthly investment over different time periods.

You'll find that the sooner you start, the greater the long-term benefit. Time, as the saying goes, is money. 

You can take advantage of compound interest by joining a supplemental savings program such as CalSTRS Pension2®. Pension2 is a voluntary defined contribution plan that offers the opportunity to invest through tax-advantaged payroll deductions in low-cost, flexible 403(b) and 457(b) plans, both Roth and traditional.

Supplement your pension today by emailing Pension2@CalSTRS.com or calling 888-394-2060, option 4, to speak with a CalSTRS Pension2 representative to enroll or learn more. You can also learn more about your supplemental savings options in the CalSTRS Member Handbook or by attending one of CalSTRS live webinars. 

So, give yourself the gift of a secure retirement by starting a supplemental savings account or increasing your contribution today. Your future self will thank you.

Happy holidays!