Understanding the Railroad Retire Family MaximumSurvivor Benefits Estate Planning
Learn how to protect your family in case something unfortunate happens to you.
Welcome everyone to another edition of the Highball Advisors railroad retirement whiteboard. My name is John McNamara of Highball Advisors. And today we're going to talk about protecting the family in case something unfortunate happens to you, right? So there's, there's some math behind here. I won't get too in depth on it, but it's a term out of social security called the family maximum, right? This is the most amount of money that your family can receive. If something happens to you, right? They want, you know, they're trying to take care of the children and dependent parents, that type of thing, but there's only so much that they're willing to give you in case something happens to you. So I'll go through this here. So let's start over on the right. We're talking about the survivor annuity, right? The survivor annuity. This is very valuable benefit here to railroaders in case something happens to you.
So it doesn't the family maximum doesn't really come into play unless there's three or more of you, then the restrictions of the family maximum payout will come into play. And really the family maximum payout, it really stems from disability perhaps abuses or whatever that they just put this whole thing on the survivor annuity. They lump disability and survivor together and kind of survivor gets a short stick of it. But nevertheless, here we are. Right? So the tier one portion of it is governed by the social security rules, right? So you have to look up the social security rules to understand the family maximum payout. The tier two is on the railroad retirement board side. And I'll go through that. So what we're talking about right, children 18, or under a, as long as they're in school, unmarried they would be covered.
And then parents dependent parents, right? They're living with you, you're taking care of them 60 or older. They can also take advantage of the being lumped inside that family maximum and then disabled children, right? So you could be over the age of 18 and still beyond this, as long as the disability was recognized before the age of 22 then you know, that can just go on forever. Really. So those are kind of the qualifications, what we're going to talk about. So as we look at the first part of it on tier one, once again, social security rules for the family maximum, right? Very complicated. They take your primary insurance amount. Don't want to get too involved on that, right? Here's the formula for 2021, right? 150% of this two 72% of that Baba. Right?
All this stuff. It's a lot. So basically, right. So if you were just a spouse, you would get a hundred percent of this survivor annuity, right? That's the way it works. However, a family, after you do the formula, right, is somewhere between 150% and 188% of the tier one payout. That's what you kind of, if you just had to do a high level planning, you know, plan somewhere in there, actually I'm probably playing at 150, right. That way you can rather shoot under and be overcovered right. So that would be called your, this would be your family maximum on tier one. All right. Now, when we get it over to the railroad retirement board side of it, we have the tier two. So the spouse gets a hundred percent. I put an asterix, there's some Cola restrictions on that. So it doesn't grow as quickly on inflation.
So you have to keep an eye on that. But the retirement board recaptures some of the benefits. It's, it's a long story. Each child using the same numbers here, 18 or younger, right. Would get 15%, a dependent parent dependent keyword there we'll get 35%. And the family maximum for tier two is 130%, right? So as a surviving family figure 150% of the tier one and 130% of the tier two. And then also then there's the other rules there, right? Is this already retiree? Is this somebody they'll use your, if you're pre retirement, let's say below the age of 62, they'll use your 62 numbers. So those are all the things that could calculate it, but I just want to introduce the concept of taking care of the family with the family maximum, what you can expect. So, h hope you found this video helpful. Please subscribe to the YouTube channel. I appreciate that. Click on the notifications, get the latest video. That's great. And the meantime, everyone, please stay safe. Stay on track and take care so long ago.
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