How does Railroad Retirement work?

BTW,

A little story. I had an aunt that got a little miffed at me when I told her one day that I wasn't actually IN Social Security, but I paid into Railroad Retirement.

"But you GOTTA pay Social Security", she said,

"Well, sorta yes, sorta no", I teased.

"Whaddya mean you don't pay Social Security"?

" I pay into Railroad Retirement."

"NOW THAT AIN'T FAIR!", she cried, "I'm gonna call my Congressman and find out why you ain't paying into MY retirement (meaning Socialistic Insecurity)!"

She acted miffed--until she apparently called somebody that must've told her the scoop! She started talking to me again shortly as if nothing had happened.

Actually I shouldn't have been teasing her so it was my fault!

GF

Gadfly

A person can not retire at 60 with less than 30 years. They can retire at 62 with less than 30 with a 20% reduction of retirement benefits. It use to be they could retire at 65 with a full pension in the late '90s RRB revised that rule and based it upon year of birth. CSX in the past 5 years has hired people of any age even in to the 50's. A lot of retired military.

Gadfly

I get a lot of people who like your aunt want to argue with me over not paying into social security. I have to explain that technically we do pay an equivalent of SS with our RRB Tier I benefits. They still argue like your aunt it isn't fair. Since the year I turned 50 the Social Security writes me every year to notify that I'm not eligible for benefits because I haven't earn enough credits. Seems like even their wondering why.

COEN77 wrote:Gadfly

I get a lot of people who like your aunt want to argue with me over not paying into social security. I have to explain that technically we do pay an equivalent of SS with our RRB Tier I benefits. They still argue like your aunt it isn't fair. Since the year I turned 50 the Social Security writes me every year to notify that I'm not eligible for benefits because I haven't earn enough credits. Seems like even their wondering why.

Since I retired, I haven't had to think about how it works, of course & I hadn't considered it since then...until that question came up. I DIDN'T know exactly how it works now considering that I hired in the 70's, "snuck" under the wire as to the retirement age vs years of service, so I didn't have to bother with it. Hard to keep up with it when you're outta the loop (and gone fishin') Plenty of confusion on the subject---including some on HERE who hired out at age 40+, THOUGHT they could retire at age 60, and get the SAME pension you and I get! N O T!!!
How DISAPPOINTED they were when they discovered that it's based on monthly CREDITS! Fewer MONTHS, Fewer CREDITS!!! LMAO! Sorry, boys!

Yep, I've had several people like my aunt, too, that thought that it wasn't "fair" that I wasn't paying into "THEIR retirement (their words), and they were going to check into it. Really got upset at me---even when I told them I was paying MORE into RRB than they were into SS---they STILL weren't happy! Whydya think I went railroading in the FIRST place, lady?" (among other things!) TO GET OUTTA SOCIALISTIC INSECURITY, DUMMY!!!!!!!!!! I get that SAME letter! LOL!


GF

If husband and wife both work for a class 1 rr, and both retire, I have been told that they will not collect the tier 2 they had paid into. Now my question is.

You paid into the 2 tier system say for 30 yrs, both of you. And you can't double dip. Does that money go back into your tier 1? or is it just put into the system? I mean if we both work but can't collect the 2nd tier, after say 30 yrs. that money is lost. We could of been using that money in a 401k instead. I've been trying to find something to clarify this, and what I find is really confusing. Just looking for a simple answer. Cause that would really stink, if you both lose that money.

My understanding is that at the least, is that the spouse might not be elliable for the 50%, however I find (online at least on RRB.gov) nothingthat statesthat you would be inelliable. If both paid into it, both are entitiled to the benefit. In theory it would be discrimination.

I think pj is right. If both of you work for a RR, both would receive their full pension at retirement. It wouldn't be right NOT to and would be discriminatory.


GF

Can anyone clarify what happens when you've paid into Social Security for a period of time and then get a Railroad Retirement eligible job? For example, here is my situation:

I am 29 years old now and have had an on-the-books job of one kind or another since the age of 14, so I've been paying into Social Security for 15 years now. In theory I could get a railroad job tomorrow, work 31 years with that same railroad, and begin to collect Railroad Retirement. My first question is, if that scenario happened, would I get anything from Social Security upon turning 16 after paying in for 15 years? My second question is regarding leaving the railroad and going back to a non-railroad job. Let's say I've got my 15 years in with Social Security and then I hire out to railroad where I work for 10 years, decide I've had enough, and go back to some other line of work for 22 years. At least the way I understand it I know that I won't receive any RRB benefits for the 10 years I paid into Railroad Retirement, but would my Social Security benefits be diminished because I didn't pay into it for those 10 years I worked for the railroad?

Railroad Retirement Tier 1 is the Social Security equivilent, so in effect you never stopped paying into Social Security. So therefore your SS benefits would not be reduced just because you spent 10 years on the railroad.

@Badfish, once you have 5 years at the railroad you are vested and can collect RrR, they take the highest five years gross and do their math

And you we do pay into social security its Tier 1, this is all fresh in my brain from my last interview

No, you are not credited under social security. Tier 1 is railroad retirements equivelent of social security. I worked for the railroad 32 years the past 6 years social security sends me a letter verifying that I'm not eligable because I quit paying in to it since 1976. If a person quits the railroad then the monies paid into railroad retirement tier 1 would be switched over to credits under social security.

CSX told me yesterday that until you hit 5 years, Tier 1&2 monies would be dumped back into SS (if you quit the RR prior to hitting the 5 year mark). If you quit after 5 years, all Tier 1 would be dumped back into SS but you lose all Tier 2 (stays with RRB)

Pj wrote:CSX told me yesterday that until you hit 5 years, Tier 1&2 monies would be dumped back into SS (if you quit the RR prior to hitting the 5 year mark). If you quit after 5 years, all Tier 1 would be dumped back into SS but you lose all Tier 2 (stays with RRB)

That's right. A person will never draw the tier II if they break their connection with the railroad after 5 years. Tier II is a private pension paid into by the individual and the railroad which they work. Someone can transfer to another railroad it doesn't affected it, go into business for themselves it won't be affected, plus some goverment jobs. The RRB website explains it's limitations. It's not like a 401k that a person can transfer around. Tier II is the bulk of a railroaders retirement. RRB latest statement the average retiree brings home $3200 a month that is determined on the individuals income while working. It's exempt from state taxes and one only pays a portion of federal taxes on the Tier 1 annuity. It's one heck of a retirement.

A friend of mine got terminated from the railroad after working 20 years. He went into business for himself. Upon retiring he'll make a choice to draw social security or railroad retirement which ever is greater. If he had went to work for someone else non-railroad related he would of lost his railroad retirement and his tier I would of been credited to social security. Going into business for himself he maintains both credits for tier I & II. Smart move it'll definitely be bigger than just social security.

3200/month correct for train service? IIRC 30 year retirement based on say 70k a year should be higher correct?

Pj wrote:3200/month correct for train service? IIRC 30 year retirement based on say 70k a year should be higher correct?

The $3200 was RRB's average estimates. It definitely could be higher depends on how aggressive a person worked during their carreer. That's why most people work more the last 5-10 years before retirement. It's not an issue we normally talk about but between friends and myself we draw between $3200-$3800 a month. That's just the employees portion if a person is married once their spouse reaches 60 they'll draw an addition spousal annuity which is approx another 40%-50% increase. The spouse also has to make a determination wether to draw their RRB annuity or social security they can not draw both. Any ex-wife can draw from it if they were married to a railroader for 10 years or more if they never remarried. Married railroad retiree average is aprox $4600-$5400 a month.