Public assistance programs hold millions of Californians near the poverty line — not because they don't work hard, but because earning a dollar more can cost them thousands in lost benefits. Nobody tells them there's a way out. We do. If saving for retirement feels like the last thing on your mind right now, that's fair — this isn't about retirement first. It's about keeping the benefits you already have, today.
Net income after benefits — family of 3
With a Traditional IRA
$7,500 of shelter
A short bridge — roughly $7.5k of room
With a 401(k)
$24,500 of shelter
A much longer bridge — roughly 3x the room
Illustrative examples — use the calculator below to find your number
For working families with earned or self-employment income. This tool is designed for households navigating MAGI-based benefits like Medi-Cal and Covered California, where income is calculated from wages or self-employment. It does not apply to SSI (Supplemental Security Income) recipients. SSI has different asset limits and income counting rules — retirement account contributions do not reduce SSI eligibility in the same way. If you receive SSI, please speak with your county social worker before taking any action.
Important: This tool is for educational purposes only and is not financial, legal, or benefits advice. Every household's situation is different — income reporting rules, benefit calculations, and IRA eligibility can vary. Before making any changes to your income reporting or opening a retirement account, please speak with your county social worker, a benefits counselor, or a qualified financial advisor to understand how it applies to your specific case. Benefit rules change — always verify current thresholds with official California program sources.
Why it happens
It's not laziness. It's math. California's assistance programs — Medi-Cal and Covered California — are built around hard income cutoffs. Cross one by a single dollar and you can lose thousands of dollars in benefits overnight. The system doesn't phase out gradually. It drops off a cliff.
So people do what any rational person would: they avoid the raises. They turn down extra hours. They stay in lower-paying jobs. Not because they don't want more — but because they've lived the math and know that earning more can leave them with less.
A family of 3 earns $2,100/month and qualifies for Medi-Cal with a $0 premium. A raise to $2,500/month pushes them over the income limit. They lose Medi-Cal coverage entirely — losing thousands of dollars in annual health benefits for just $400 more per month.
What nobody tells them: contributing to a retirement account lowers the income number the programs actually check — called MAGI. Put $7,500 into a Traditional IRA and your MAGI drops by $7,500. You can earn more, keep your health coverage, and watch that $7,500 grow in the stock market — building the same wealth that middle-class families take for granted.
"As a self-employed mom, I watch my income every month so a good month doesn't cost my kids their health coverage."
This is a real experience shared by millions of California families. The cliff is real. But so is the way out — and this tool shows you both.
Read the full story →How it works
The path out of the poverty trap is real — it just requires knowing it exists.
Enter your income, household size, and county. The calculator shows exactly which benefits you have, which thresholds you're near, and how close you are to the drop.
Benefits programs don't use your paycheck — they use MAGI, your Modified Adjusted Gross Income. Pre-tax retirement contributions reduce MAGI dollar-for-dollar. Earn more without crossing the cliff.
Contribute up to $7,500/year to a Traditional IRA through CalSavers or any brokerage. That money goes into the stock market — building the same long-term wealth that everyone else has access to.
California programs covered
The calculator accounts for the income thresholds of California's major health assistance programs.
Free or low-cost health coverage for California families. Income limits vary by household size and program category.
Tax credits and subsidies for health insurance. Hard income cliff at 400% of the federal poverty level.
Help with energy costs — heating, cooling, and utility bills. Income thresholds are set at 60% of the state median income.
Temporary assistance for families with children. Time-limited cash aid with income and work requirements.
You deserve to know this
The stock market, compound interest, retirement security — these aren't just for people who already have money. They're for anyone who knows how to use MAGI. That's what this calculator is for.
Find my way out →