Who can explain in simple terms the basics of RR Retirement,I understand the 30 years of service at 60 age deal,but what about a man who hires at say age 41.Does he have to work 30 years to get a full retirement? What about the money he payed into SS all the years prior to RR service,does it go away or does it convert into tier 1,I know you cannot collect both SS and RRR.I’ve been told that if a man is entitled to a say $2000.00 per month benefit his wife would receive a benefit that is 50% of the $2000.00 true or false?
Basically,
- 60 years of age and 30 years service for full benefit.
- Less then 30 years service - you can retire at 65, with benefit prorated to your years of service.
- Any SS benefit you’ve paid will be figured into your Tier I.
- Your spouse will receive 50% of your benefit. As a couple, you in effect get 150% of your benefit.
- When you die, your spouse will recieve a 100% benefit.
- You must work 5 years to be vested in Tier II. If you quit before vesting, any Tier II money paid in is lost.
Nick
As edblysard mentioned about getting a tax man, do it, or better yet stop into a Railroad Retirement Office and they will gladly explain all the facts. I have talked to at least three different offices in my years as a retiree… and everyone was very helpful, be it over the telephone or in person. The questions you indicated are basic, BUT, the answers are or can be very complicated. Many variables must be considered. End results on the first of each month can be rewarding, but again many factors come into play
Newbie here:
What is Tier I and Tier II?
Thanks,
BBear
Tier I is exactly the same as Social Security in tax and benefits (unless you have 30 years - then you can collect at age 60 instead of the SS age - which depends on your birth date)
Tier II is extra that you can collect if you retire from the RR (i.e. you have a “current connection” - the last job you hold before you start to collect is with a RR) You pay an extra payroll tax over and above Tier I and Medicare for this: 4 - 1/2%
Using myself as an example. I will be 51 with 29 years this June. If I quit the RR then, I couldn’t collect RR retirement (Tier I and II) until I am 66-1/2. If I go and get another job that pays SS, like a greeter at Walmart, I lose my Tier II…unless I go back to work for a RR before I start to collect which reestablishes the “current connection”.
But, if I work one more year to get my 30 years in, I could quit and start collecting at age 60. Again, if I take a job that pays SS, I lose my Tier II, unless I finish up on a RR.
One tax thing to remember is that the states can’t tax Tier II benefits whereas they can tax other public or private pensions. So even if you could the same pension amount from another employer, you might come out ahead with RRB retirement because of it’s not being taxed (of course if you live in a state without a state income tax, I suppose it doesn’t matter.)