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The Railroad Retirement Board (RRB) is a government agency that provides retirement, disability and unemployment benefits for railroad workers. Railroad workers typically receive RRB benefits instead of Social Security. Compared to people with Social Security, most people with RRB benefits pay higher taxes but receive larger retirement benefits.
How Railroad Retirement Board benefits work
Railroad Retirement Board benefits — retirement, unemployment and disability — are an alternative to Social Security benefits for workers in the railroad industry.
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Like Social Security, RRB benefits are funded with payroll taxes from employees and employers. The National Railroad Retirement Investment Trust invests these funds in a diversified portfolio, and the funds pay the RRB benefits. This model is similar to pension funding but is different from Social Security, which legally can only invest in U.S. Treasury Bonds.
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The typical railroad retirement benefit is a monthly check with two main components, called Tier I and Tier II benefits. Tier I benefits resemble Social Security; Tier II benefits resemble a private pension.
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Are Railroad Retirement Board benefits higher than Social Security benefits?
Compared to people with Social Security, most people with RRB benefits receive larger retirement benefits but pay higher payroll taxes. For example:
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In 2022, the average monthly Railroad Retirement Board benefit for retired rail employees was $3,210 ($4,020 for career railroad employees). The average monthly Social Security retirement benefit was about $1,776 in December 2022.
2023 RRB payroll tax rates, which include Medicare taxes, are:
Who is eligible for RRB benefits?
People who work with and on trains — conductors, engineers and mechanics — as well as in office positions at railroads, such as sales and customer service, are usually eligible for Railroad Retirement Board benefits.
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Every month in which you earn compensation — including sick pay or vacation pay — gets you a service month, or credit.
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You generally become eligible for retirement benefits after five years of railroad employment (or at least 10, if you started the job before 1995).
What is the retirement age for Railroad Retirement Board benefits?
When you can retire depends on how many service credits you have and how old you are. For example, a railroad worker with at least five years of service after 1995 can collect an RRB retirement benefit at age 62, which is similar to the earliest a worker can collect Social Security retirement benefits.
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Just like Social Security, your RRB benefit is reduced if you retire before your full retirement age, which is 67 for those born in 1960 or later. (If you were born before 1960, your full retirement age is sooner.)
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A railroad worker with at least 30 years of service can retire at 60 without a reduction — an option not available to those in the Social Security program.
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Workers with at least 25 years of railroad employment that began before 1981 are also eligible for a Supplemental Annuity Amount of $23 per month, plus $4 for each year of service (up to 30 years). To receive this, you must work at a railroad for at least 12 of the 30 months before your retirement.
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Workers who were eligible for benefits before 1975 may be eligible for an additional annuity, too.
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Like Social Security, RRB retirees get annual cost-of-living adjustments, or COLAs. The formula is the same as for Social Security’s COLA.
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RRB benefits are taxable. What you owe depends on your total retirement income and the tax deductions and credits you take.
How does the RRB calculate retirement benefits?
For the Tier I portion of RRB retirement benefits: The calculation includes any employment outside the RRB system, and it uses the same benefit formula the Social Security Administration does — that is, benefits are largely based on an index of a worker’s highest 35 years of earnings. But, as mentioned, the age and work requirements for RRB are different from Social Security.
For the Tier II portion of RRB retirement benefits: The math is different here than what the Social Security Administration uses. The basic steps in the RRB formula are:
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Find the average of your highest 60 months of earnings, up to a maximum.
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Multiply the monthly average by 0.007.
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Multiply the result by the number of years worked at an RRB-covered job.
For example, according to the RRB, multiplying someone’s average monthly salary of $4,616 by 0.007 results in $32.312; if the person has 40 years of service, their Tier II benefit would be $1,292.48.
Estimate your Social Security retirement benefits
Your actual benefit may be lower or higher than estimate made with this calculator, because it does not take into account your actual earnings history.
We assume you have earnings every year until you begin receiving Social Security benefits. If you had several years of noncovered employment or your earnings changed significantly from year to year, this calculator will overestimate or underestimate your benefit.
In the late 1800s, retiring from a railroad meant relying on a private pension from the railroad. By the 1930s, this system faced problems. For example, a railroad worker could face a high cost for switching jobs: forfeiting retirement credits earned at a previous employer. Congress addressed these problems when it created the RRB in the 1930s, which consolidated the patchwork of privately run retirement systems under a single, government-run program.
The RRB was developed alongside Social Security, though the RRB went into effect first. The programs have many similarities, but they have always been two distinct programs. In 1974, an overhaul of the program led to the current two-tiered system, which accounts for railroad workers who also have held jobs covered by Social Security.
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