How Length of Service Affects Railroad Retirement
Railroad Retirement benefits are divided into Tier I and Tier II benefits.
What are Tier I Retirement Benefits?
Tier I railroad retirement benefits are a substitute for social security benefits and are therefore quite similar. They are calculated based on the highest 35 years of indexed earnings. The benefits are first payable at age 62, and full retirement benefits are available from ages 65-67.
How Does Length of Service Affect Tier I Retirement Benefits?
- Time of Service Determines Eligibility
To be eligible for Tier 1 Retirement Benefits, a railroader must have worked at least 10 years in covered railroad service, or at least five years after 1995.
- Time of Service Affects Early Retirement
If a railroader has at least 30 years of railroad service, early retirement is available at age 60 with no reduction in benefits. Moreover, for those with at least 25 years of qualified service, a supplemental annuity is available.
What are Tier I Disability Benefits?
Total and Occupational Disability Annuities are available to railroaders. A total disability is one which precludes the railroader from engaging in any employment. An occupational disability is one which precludes the railroader from engaging in his/her regular duties, even if the railroader could perform another job.
How Does Length of Service Affect Tier I Disability Benefits?
Total disability annuities are payable to railroaders under the full retirement age who have at least 10 years of qualified railroad service. Occupational disability benefits are payable to railroaders of any age who have at least 20 years of qualified railroad service and a current connection to the railroad industry, or for those workers at least 60 years of age but under the full retirement age who have at least 10 years of qualified railroad service and a current railroad connection.
What are Tier I Spousal Benefits?
Spousal annuities are available to current spouses of railroaders. Generally the spouse and railroader must have been married for at least one year. Divorced spouses may also be eligible for Tier 1 benefits.
How Does Length of Service Affect Tier I Spousal Benefits?
Spousal payments are subject to the same age and service rules as retirement benefits, meaning at least 10 years of qualified railroad service, or at least 30 years for early retirement and no reduction in benefits.
What are Tier I Survivor Benefits?
Railroad retirement survivor benefits can be paid to widows, widowers, divorced spouses, dependent parents and children. Grandchildren may also be eligible if both parents are disabled or deceased.
How Does Length of Service Affect Tier I Survivor Benefits?
For survivors to be eligible for benefits, the deceased railroader must have at least 10 years of qualified railroad service, or five years of service after 1995 and a current railroad connection at time of death or retirement.
What are Tier II Benefits?
Tier II benefits are similar to a private defined benefit pension. Tier II benefits are calculated as a percentage of the average of the 60 months of highest earnings multiplied by years of service. These benefits include a cost of living adjustment. Tier II benefits are also available to spouses and survivors of railroaders. Divorced spouses are generally only eligible for these benefits as part of a property settlement.
How Does Length of Service Affect Tier II Benefits?
Again, eligibility for benefits is contingent on meeting the minimum years of railroad service. Tier II benefits, however, rewards retirees for longer service. The amount of benefits is a multiple of years of service, hence, the longer the service, the greater the benefit. For more information about railroad retirement, contact Hermann Law Group at 877-773-3030.