6 Moves With a Big Effect on Railroad Retirement Savings

Six Things Railroaders Can Do to Increase Their Retirement Nest Egg

Saving for retirement comes down to a simple equation: spending versus saving. For railroaders, building a strong retirement nest egg requires intentional choices on both sides of that ledger. Below are six practical strategies to help you increase your savings and strengthen your long-term retirement outlook.

1. Increase Your Savings Rate—Even by 1%

If you ask most people how much they’re saving, the answer is usually “not enough.” The good news? Even a small increase can make a big difference. Boosting your savings rate by just 1% can have a powerful impact over time. For example, if a 25-year-old railroader increases their savings by 1%, that single change could add roughly $84,000 by retirement. Small adjustments, made early, compound into meaningful results.

2. Reduce High-Interest Debt

Credit card debt is one of the biggest obstacles to retirement readiness. With interest rates often ranging from 17% to 20% or more, carrying balances can severely erode your ability to save. Research shows that high credit card debt can reduce retirement readiness by as much as 40%. Similarly, borrowing from your 401(k) may seem convenient, but it ultimately reduces your long-term savings and growth potential. Reducing debt is one of the most effective ways to protect your retirement.

3. Make Saving a Priority

The average savings rate for baby boomers is around 8%, but a more realistic target is closer to 10%. Start by calculating what 10% of your income looks like, then treat it as non-negotiable—money that’s set aside before other spending decisions are made. Once savings are prioritized, the rest of your budget can be adjusted around that commitment.

4. Avoid Cashing Out Your 401(k)

When changing jobs, it can be tempting to view a 401(k) balance as “found money.” In reality, cashing it out is costly. Withdrawals are subject to ordinary income taxes, and if you’re under age 59½, an additional 10% penalty applies. About 15% of workers cash out their accounts when leaving a job, but doing so puts you firmly on the spending side of the ledger instead of continuing to build retirement security.

5. Model Your Spending Realistically

One common planning mistake is underestimating expenses. Almost no one accurately predicts that they spend more than they think—but most do. Retirement spending is also dynamic. Early retirement often comes with higher spending as people travel and pursue hobbies. Spending typically slows later, then may increase again due to healthcare needs. This pattern is sometimes called the “retirement smile.” Accurate spending estimates are critical for realistic retirement planning.

6. Prepare for the Early Retirement Spending Spike

Many new retirees are surprised by how much they spend in the first few years. Studies show that six out of ten new retirees experience a 20% increase in spending during their first three years of retirement. Even though retirement is often associated with lower expenses, the early years can be the most expensive. Planning ahead for this spike can prevent financial stress later.

Final Thoughts

Many railroaders focus heavily on their retirement benefits but underestimate the importance of personal savings. This is especially true for early-career railroaders. Starting now—and committing to disciplined saving—can dramatically improve your financial future. The earlier you build the habit, the more time your savings have to grow and work for you.

Staying intentional about saving today can make all the difference tomorrow.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.