Should My Wife Stop Teaching and Collect Her Railroad Retirement?

Welcome back to another edition of the Highball Advisors Railroad Retirement Mailbag! I’m John McNamara, and today’s question comes from Bill F.

Bill writes: “I’ll be retiring in June of 2027 at age 60 with 36 years of service. My wife is two years younger and plans to continue teaching until age 64. Is it best for her to apply for Railroad Retirement spousal benefits at age 60 while continuing to earn above the allowable $23,000 income limit?”

First, Bill—congratulations on 36 years of dedicated service.

This question touches on an important aspect of Railroad Retirement planning: when a spouse should begin receiving a spousal annuity. In most cases, once the railroad employee begins their own annuity, the spouse becomes eligible for the spousal benefit at age 60. What often surprises people is that there is no delayed retirement credit for spousal benefits under Railroad Retirement. In other words, the benefit does not grow if the spouse waits beyond age 60.

Because of this, it generally makes sense for the spouse to start the annuity as soon as they are eligible—even if they are still working. Your wife would be subject to the Railroad Retirement Board’s earnings restrictions, so her benefit may be reduced while her income exceeds the annual earnings limit. Those reductions apply to both Tier I and Tier II. However, since the spousal benefit doesn’t increase by waiting, receiving even a reduced amount is usually more advantageous than delaying and receiving nothing.

If you want a deeper explanation of how employment affects spousal benefits, I recommend watching my video, “Working Spouses and Their Railroad Retirement,” where I walk through examples and key rules.

As always, if you have questions about Railroad Retirement, feel free to send them my way—your question just might be featured in a future Mailbag.

Until next time, stay safe, stay on track, and take care!

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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.