How our monthly Railroad Survivor Annuity is Computed

Welcome, everyone, to another edition of the Highball Advisors Railroad Retirement whiteboard. I'm John McNamara from Highball Advisors, and today we'll be delving into the Survivor Annuity, a crucial aspect of estate planning. This benefit provides valuable support to your family in case of unfortunate events. Let's explore who is eligible and how the percentages are calculated. So, let's dive right in.

The Survivor Annuity consists of two portions: Tier One and Tier Two. Let's begin with Tier One. Widows or widowers who are at least 60 years old are eligible for 100% of the employee annuity. However, this percentage may be subject to adjustments based on the employee's age and any early retirement penalties they may have incurred. It's important to note that the survivor annuity does not revert to the employee's full retirement age.

Next, for young mothers, young fathers, and all dependent children, there is a 75% share available. This applies to children who are 18 years old or younger, disabled, or deemed disabled before the age of 22. Additionally, if you are taking care of a dependent parent who relies on you for support, you may be eligible for an 82.5% share.

Now, let's move on to the Tier Two portion. In Tier Two, widows or widowers receive 50% of the annuity, while children (18 and under or disabled) are eligible for 15%. Dependent parents can receive 35%. The family, as a whole, is guaranteed a minimum of 35% and a maximum of 130% of the Tier Two benefit.

It's essential to consider possible reductions that may affect the Survivor Annuity. These include deductions related to social security eligibility and government pension offsets. Furthermore, if both partners in a working couple are entitled to their own railroad retirement annuity, they cannot receive double benefits. Reductions may apply in such cases. Additionally, there is a family limit of three, although the maximum of 130% can be exceeded if there are more children.

Both Tier One and Tier Two annuities may be subject to age reduction limits if the widow or widower retires before their full retirement age. Work deductions are also a factor to consider, as a certain level of income could result in deductions. These limits change as you approach your full retirement age.

Understanding the significance of the Survivor Annuity is crucial for comprehensive estate planning. It's important to address these matters and consider other options such as life insurance to provide additional support for your family. If you're approaching retirement or have already retired, feel free to reach out to me for assistance with the railroad retirement process. I can guide you through these intricacies. Don't forget to subscribe and enable notifications to receive future videos. Share this valuable information with fellow railroaders. Stay safe, stay on track, and take care. Until next time, 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.