I tried explaning how railroad retirment works to my wife, but of course I’m no lawyer and I dont understand the calculations and wordding on RRB.GOV. Can someone explain it to me brefily in laymen terms so i can let her know. I know everyone is diffenrent but to throw out a number… If i was to earn $85,000 each of my last 5 years, am 60 years old and worked at least 30 years… how much would i recieve and her? combined? I tried telling her she will get a check even though she never worked a day on the railroad. Shes in disbelief.
Or if its eaiser for you, what are you collecting and your wife?
RRB annuities have features of both Social Security and private defined-benefit pensions. The law does provide for spouse’s and widow(er)'s benefits. You would be better off contacting an RRB rep or their website to get a general idea of what you might receive.
If you go to the RRB web site and login, you can use their Employee Annuity Rate Estimate.
It’ll show you your benefit and your spouse.
Generally, your spouse gets a 1/2 share once she reaches 60 yrs old. If you predecease her, she’ll get a whole share.
Tier I is taxed and adjusted for cost of living like Social Security. Tier II is treated like a regular pension and is taxable income. Tier II only gets a fraction of Tier I’s cost of living adjustment (I think something like 35%)
The amount of a regular annuity is the total of portions which are computed separately under different formulas and called tiers, plus any vested dual benefit payment also due.
Tier I
The first tier is calculated in generally the same way as a social security benefit. Any social security credits of an employee are combined with his or her railroad retirement credits for tier I computation purposes.
In computing tier I, an employee’s creditable earnings are adjusted to take into account the changes in wage levels over a worker’s lifetime. This procedure, called indexing, increases creditable earnings from past years to reflect average national wage levels just prior to the employee’s first year of eligibility. The adjusted earnings are used to calculate “average indexed monthly earnings,” and a formula is applied to determine the gross tier I amount.
For those first eligible in 2015, the gross tier I is equal to:
never knew how it worked, but it was good for my parents. Mom was able to draw something for her 12 years with Frisco, even though she only worked 2 years under RR retirement, quitting when her and Dad got married, because Frisco didn’t allow married women to work in 1939. She applied at 63 just for the heck of it and even got $1,000 in back pay because she didn’t apply at 62. Dad was 2 years younger, so she was already drawing when he died at 61. She also got widow’s portion for his RR retirement, but the Medicare premium was taken out of her check when she turned 65. Don’t know if it still works that way or not with getting 2 checks, she died in 1993. At that time, RR Medicare was handled by Travelers Ins, reg SS Medicare was Gen. American. Once in a while, bill was sent to wrong place and we had to call and correct it, especially when she got sicker towards the end and in/out of hospitals.
I wish I’d worked for RR too, much better than SS, Frisco wasn’t hiring much office staff, moving a lot to Springfield, MO, but I never checked with MoPac. Too late now.