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Can You Really Retire on Railroad Retirement Alone? Thumbnail

Can You Really Retire on Railroad Retirement Alone?

Tier 1 Tier 2 Video Annuity Retirement

Hello, everyone, and welcome to the latest installment of the Highball Advisors Railroad Retirement whiteboard series. I'm John Mcara, representing Highball Advisors, and today's topic centers around the income aspect of railroad retirement. The question at hand is whether this income alone is sufficient to support your retirement lifestyle. This discussion was sparked by a statistic I came across regarding social security – apparently, 40% of Americans rely solely on it for their retirement income. This piqued my curiosity, prompting me to compare this scenario with railroad retirement. So, let's delve into the details.


To begin, let's consider a career railroader – someone with a commendable 30 years of service, retiring at age 60. Their average monthly income hovers around $4,000, assuming the prerequisite 30 years. These figures are sourced from both the Railroad Retirement Board and the Social Security Administration. Now, turning to a retired railroader – an individual with fewer than 30 years of service – their monthly income, including the incorporation of social security, amounts to approximately $3,210. Finally, a social security recipient receives around $1,650 per month. The stark contrast here is evident; the latter is notably lower, constituting roughly 40% of the $4,000 benchmark. This discrepancy intrigued me, especially considering the figures from 2022 – where a career railroader's monthly income is around $4,560, and social security clocks in at about $2,320, nearly double the latter. These numbers gain additional potency when accounting for spousal annuities, potentially elevating the monthly household income. This thought-provoking comparison highlights that relying solely on social security could lead to living below the poverty line.


While these calculations offer valuable insights, it's crucial to consider a range of factors in retirement planning. Firstly, the erosion of buying power due to inflation is a real concern. Over the years, the purchasing power of tier one or social security benefits has decreased by about 40%, signifying a lack of alignment with the rising cost of living. Furthermore, the specter of benefit cuts looms over social security, which is projected to be depleted by 2035. The interplay between social security and railroad retirement remains uncertain, potentially affecting the financial landscape for retired railroaders.


Lastly, the evolving expenses associated with aging, particularly in healthcare and long-term care, pose significant challenges. These expenses can escalate over time, potentially impacting the adequacy of your retirement income. In light of these considerations, it becomes evident that solely relying on railroad retirement income might not provide the comprehensive cushion needed for retirement.


In closing, this exploration highlights the potential limitations of relying solely on railroad retirement income and emphasizes the importance of comprehensive retirement planning. If you've found this discussion thought-provoking, and if you're nearing retirement or require assistance in understanding your railroad retirement benefits and other available resources, I encourage you to book a session with Highball Advisors for a comprehensive retirement process analysis. Sharing this video and activating notifications for our latest content is much appreciated. Until our next encounter, I urge you to stay secure, remain on the right track, and take good care. Farewell for now, everyone. Goodbye.

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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.