railroad retirement and social security

[wolfbay]

I am 62 and dw is 8 yrs younger. I decided to wait till 70 for SS . My wife will get RR retirement and not SS.The program was started before SS but i think the benefits are similar.Anyone familiar with the program?I was assuming the situation would be the same as her having SS but I'm not sure.

 

[MasterBlaster]

I am 62 and dw is 8 yrs younger. I decided to wait till 70 for SS . My wife will get RR retirement and not SS.The program was started before SS but i think the benefits are similar.Anyone familiar with the program?I was assuming the situation would be the same as her having SS but I'm not sure.

I did a search and read a little about RRBs. Evidently Tier I RRB benefits are almost exactly like SS and have many overlapping areas. The RRBs also pay (and charge extra payroll taxes for) a Tier II benefit greater than SS has.

Did you have a specific question regarding benefits ?

I suggest you start reading from both the railroad benefit website and the SS website:

http://www.rrb.gov/opa/qa/pub_1203.asp

http://www.rrb.gov/opa/qa/pub_1103.asp

http://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p41.html

< from the SSA website>

Because of their often parallel development, the Railroad Retirement program and Social Security share a number of programmatic similarities, the most substantive of which is the coordination of RRB's Tier I benefits with Social Security benefits. At the same time, the two programs possess some noteworthy differences in terms of both benefit structure and funding. For example, RRB provides a unique Tier II benefit designed to replicate a private pension, and the agency has introduced innovative features to increase program income, such as investing a portion of its funds in equities.
As a result of the coordination between the two programs, the future of Social Security has a direct impact on RRB, and any alterations to Social Security tax rates or benefit levels will have an effect on annuitants receiving funds through RRB. Understanding the historical experience of RRB, its policy features, and its financial relationship with Social Security can help guide policymakers seeking to ensure long-term solvency for both systems.

<from the railroad benefit website>

1. How are railroad retirement spouse annuities computed?

Regular railroad retirement annuities are computed under a two-tier formula. The spouse annuity formula is based on certain percentages of the employee's tier I and tier II amounts.

The tier I portion of an employee's annuity is based on both railroad retirement credits and any social security credits that the employee also earned. Computed using social security benefit formulas, an employee's tier I benefit approximates the social security benefit that would be payable if all of the employee's work were performed under the Social Security Act.

The tier II portion of the employee's annuity is based on railroad retirement credits only, and may be compared to the retirement benefits paid over and above social security benefits to workers in other industries.

The first tier of a spouse annuity, before any applicable reductions, is 50 percent of the railroad employee's unreduced tier I amount. The second tier amount, before any reductions, is 45 percent of the employee's unreduced tier II amount.

2. How does a railroad retirement spouse annuity compare to a social security spouse benefit?

The average annuity awarded to spouses in fiscal year 2011, excluding divorced spouses, was $979 a month, while the average monthly social security spouse benefit was about $425.

Annuities awarded in fiscal year 2011 to the spouses of employees who were of full retirement age or over and who retired directly from the rail industry with at least 25 years of service averaged $1,118 a month; and the average award to the spouses of employees retiring at age 60 or over with at least 30 years of service was $1,332 a month.

 

[kaneohe]

Taxation is also very similar.....Tier I is taxed like SS and Tier 2 is taxed like a pension.

 

[wolfbay]

Thanks for the information.Am I correct in saying the advantages of an older husband delaying SS till 70 are still there even if the younger spouse has RR retirement?

 

[Brat]

I think the two of you should pay a visit to your local RR retirement office. The one in Portland has been a tremendous help to my brother. Ask for an estimate of her benefits based on several target retirement years. Ask if she predeceased you and provided for a spousal annuity your SS would be impacted. I think that if either of you passed the survivor has the option of either half the survivor Tier I/SS or using your own earnings record.

Years ago RR retirement didn't participate in SS (rather like Federal Civil Service Retirement) so this can get complicated.