No, you generally cannot borrow money directly from your CalPERS (California Public Employees’ Retirement System) retirement account. CalPERS does not offer loans against your retirement savings like some other retirement plans, such as 401(k) plans, might. The funds in your CalPERS retirement account are specifically designed to provide you with income during your retirement years and are not accessible for loans or early withdrawals while you are still employed in a CalPERS-covered position.
Options to Consider:
- Service Credit Purchase: While not a loan, you can use your retirement funds to purchase additional service credit, which can increase your pension benefit. This is essentially buying extra years of service to boost your retirement income.
- Hardship Withdrawal: CalPERS does not offer hardship withdrawals. Once you’re retired, you can start receiving your retirement benefits as a monthly pension, but this is not the same as borrowing money from the account.
- Alternative Sources of Funds: If you need money before retirement, you may need to explore other financial resources, such as personal loans, home equity loans, or borrowing from other retirement accounts like a 401(k) if you have one.
- Retirement Withdrawals: After retirement, you can begin receiving your CalPERS pension as regular payments. However, the amount you receive will depend on your years of service, final compensation, and age at retirement.
Important Considerations:
- Pension Stability: Borrowing against a retirement account can undermine financial stability in retirement. Keeping your CalPERS retirement funds intact ensures you receive a consistent income during retirement.
- Tax Implications: Early withdrawals from retirement accounts are typically subject to taxes and penalties. CalPERS retirement benefits are designed to be disbursed as a pension, not as a lump sum that can be accessed before retirement age.
If you’re in need of funds and considering how your retirement savings might play a role, it may be wise to consult with a financial advisor to explore all your options while protecting your long-term financial security.