Social Security, railroad retirement, which one works best for you?
Welcome everyone to another edition of the Highball Advisors Railroad Retirement Whiteboard. My name's John McNamara of Highball Advisors, and today we're going to talk about Social Security/railroad retirement. Two distinctive benefit programs, but they can work together, and sometimes you might want to do one and not the other. So I'm going to walk through times that a railroader should consider Social Security and not the railroad retirement. So this is important stuff, but first let me do the little PSA.
Always contact the Railroad Retirement Board before filing Social Security. Don't act on your own. Call the Railroad Retirement Board. You worked for the railroad. That's what they're there for. Contact them before you get into the Social Security. So let's go through some of the examples here.
You have a minor child. Railroad Retirement Act does not cover a minor child. So you've retired from the railroad. You have a minor child. They can get covered under Social Security, not through the Railroad Retirement Board, so through the act. So that's very important. You have a minor child and retiring. God bless you on that.
Number two, still working for the railroad and have reached full retirement age. So maybe you're, in this case, let's say 67. I'm still working for the railroad. Remember, you cannot collect railroad retirement until you actually leave the railroad. And the reason that is is because your tier II is always growing. So you wouldn't be able to collect it, because that number is still growing. However, you can collect your Social Security, but it's important to remember that that Social Security is only going to be based on your non-railroad service years. So Social Security does not get count your railroad service years.
So if you have some years, 10, 15, 20 years or whatever of non-railroad service, that would be what you could get at full retirement. Some people say you can get it earlier, but you're going to have deductions and that because you're going to still be working. It's really not worth the discount. Because remember once that gets set, that number's set. So I would full retirement age.
Okay, number three, your spouse reaches full retirement age. So that's a good one. They could do Social Security there. Definitely something you want to look at there. That's a possibility. That makes sense. And then fourth, Social Security is more than your tier I amount. So that would be for those types of railroaders, maybe you got 5, 10 years in the railroad, but most of your higher earning years are Social Security, and like I've said, Social Security doesn't take into account for railroad retirement. So you might want to say, "I'll take my Social Security in lieu of my tier I," because you'll still get the tier II, even though you have Social Security. So that would be a better number to take versus your tier I.
Now just remember, contact the Railroad Retirement Board before you file, do any of these strategies, but definitely this one here for those who just have 5, 10 years of railroad service, that's definitely something you want to look at for.
So I hope you found this helpful. Feel free to reach out to me, especially as you're nearing retirement, because these are the strategies. There's so many ... this isn't just, oh, I got a Social Security strategy. No I've got railroad retirement strategy. I got Social Security strategy, all these things working together. So you got to make sure that you maximize these. So feel free to reach out to me. Go through the boarding for railroad retirement process if you're nearing retirement and these are the types of conversations that we'll have.
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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.