How to Replicate Your Lost Railroad Retirement Survivor Annuity

As you approach retirement, the prospect of losing your current connection may loom large. Hi, it's John McNamara from Highball Advisors Railroad Retirement Whiteboard. Let's tackle this scenario together.

Consider this example: You're under 60, with substantial years of service, maybe 25 or 30, but you're contemplating retirement. However, continuing to work in a W2 position means forfeiting your survivor annuity due to the loss of your connection. But fret not, there's a strategy to replicate that annuity for those transitional years.

Your current connection, often your spouse, entitles you to a significant benefit, typically 100% of the tier two of the deceased railroader. Let's break it down. Suppose you're 55, with a 30-year tenure, and your annuity begins at 60, paying $2,000 monthly. To replicate this, you'd need roughly $300,000 in an annuity by 55.

Now, let's explore a solution: term life insurance. Purchasing $500,000 of term life at 55, costing around $265 monthly, can provide financial security. If you pass away before 85, your spouse receives $500,000, which can be used to buy an annuity or cover expenses.

But what about after 85? Two options: live off investments or purchase a qualified life annuity contract (QLAC) from your IRA for $50,000, yielding $2,000 monthly from 85 onward.

These are just examples. You might opt for shorter-term life insurance or alternative investment strategies. If you're navigating retirement decisions, including survivor annuities, reach out to me for tailored guidance through our Railroad Retirement process. Don't forget to subscribe for more insights. Until next time, stay safe, stay on track, and take care. Goodbye for now!

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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.