Learn How Railroad Retirement Age Reductions Impact Spouses of Railroaders

Welcome to another edition of the Highball Advisors Railroad Retirement whiteboard. I'm John McNamara of Highball Advisors, and today we're diving into spousal annuity age reductions. This is particularly important if your spouse is retired from the railroad, and you're considering retirement yourself.

Let's start with the basics. The spousal annuity is a fantastic benefit of railroad retirement, amounting to 50% of the railroader's tier one and 45% of their tier two benefits. But what about age reductions? These reductions are based on your full retirement age. For those born in 1957, full retirement age is 66 and six months. However, at 62, you'll face a 32.5% reduction, and for those born in 1960 or later, with a full retirement age of 67, it's a 35% reduction.

Let's visualize this. At full retirement age of 67, there's no reduction. But at 62, you're looking at a 35% reduction, 28% at 63, 21% at 64, 13.3% at 65, and 6.7% at 66. Those first three years are particularly challenging. For example, a $1,000 spousal annuity would be reduced to $650 at 62, a significant difference.

These reductions can have a big impact on your retirement planning. It's crucial to discuss these numbers with your spouse. Consider whether claiming at 62 makes sense, especially if your spouse plans to claim their own social security later.

If you're nearing railroad retirement, sign up for the boarding process with Highball Advisors. We'll guide you through these decisions and provide all the answers you need. For those already subscribed, thank you! Click the notification bell for the latest updates and share this video with others in the railroad community. Stay safe, stay on track, and take care. See you next time!

Get Free Railroad Retirement Assessment

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.