When should I start my Railroad Retirement?
Welcome everyone to another edition of the Highball Advisors Railroad Retirement Whiteboard. My name's John McNamara of Highball Advisors, and today's topic is, "Hey, when should I start my Railroad Retirement?" So if you look at the title here, it starts at 62. So this video is really for those railroaders who aren't going to have their 30 years. So remember the 60 and 30 people, they could start at 60 full retirement age benefits. Done a lot of videos on that, can look at that.
But how about those people, those railroaders who aren't going to make the 30 years? When should they start it? So I thought I'd put on some arguments for, "Hey, you should start it." And then things that you got to watch out for obviously. And then, "No, they shouldn't start it." And things that you want to keep an eye on also. And then you can make a decision off of that.
So let's start on the yes side. First of all, you don't know the future, right? So bird in the hand is worth two in the bush. YOLO, you only live once, so there you go. So that might be a big reason, just living for the moment. Something to be said for that. Body can't work anymore. Hear that all the time. Very physical industry, there's no doubt about that. The wear and tear it can take in your body, you feel you only have so many good years left on the body. Now what you have to watch out for is going to be the smaller check in retirement. Can you live on that smaller check? At 62, 30% reduction on your Railroad Retirement by taking at 62, assuming you're born 1960 or later. So you got to plan on that.
Now remember, the tier two is also reduced, and if you're in another job, it's going to stop growing also once you leave the railroad. So tier two reductions, important on that. Here's another thing you might want to think about for a reason to start Railroad Retirement. If the majority of your years is in Social Security, maybe you only have 5 or 10 years in the railroad, hey, start the Railroad Retirement now and then look to do Social Security at 70, it might be a bigger number. Pull that Social Security statement. So that might be a reason to do Railroad Retirement at 62. Really great stuff there on that.
And then also you're saying yourself, "Well listen, I'm active now. I want to do that now. I'm going to be slowing down later in the 80s and 90s, like everybody else does." You just slow down. So why do I need a larger check later when I'm not going to be doing anything except maybe whatever it is.
So now the reason not to do it, let's go on that side. Larger check. Larger check, larger options. More money, more options. So think about that. Maybe you just enjoy working. Hey, believe it or not, there's people out there that enjoy working. I love working. So enjoy working. That could be a reason for sure. Don't need the money. So if you don't need the money at this point, might as well let it grow. Why submit yourself to those reductions? Don't need the money yet. Something to think about. You're still working. And let's say you're still working and you maybe working at a non-railroad job and you say, "I'll start my Railroad Retirement." Well, you're going to submit yourself to a lot of work deductions, so you don't want to do that.
Tier one reductions, tier two reductions. So you say, "Well, I don't want to do that. I'll just keep working." And then finally, also concerned about unforeseen expenses. So as I've talked about multiple times is later in life you're going to have possibly those bigger healthcare expenses, long-term care issues, that type of thing. Obviously as we get older, we get more health issues definitely come up. So those would be on the no side of waiting to take out your Railroad Retirement.
So as you can see, there's a lot to think about here, a lot of options. So hope you found this video helpful. Reach out to me if you're at or nearing retirement, and you want to make this big decision, right? Really understand it because at the end of the day, you only really get one chance at this. So you want to get that right. So like I said, go through the Boarding for Railroad Retirement, get the assessment really helpful. Click on the notification bell, share this video with other railroaders who are on the fence getting closer to retirement. I think you'd be doing them a favor. And then until next time, everyone, please stay safe, stay on track, and take care. So long everybody. Bye.
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.