VIDEO: Understanding Spouse Annuities in Railroad Retirement

Transcription:

My name is John McNamara with Highball Advisors, and this edition we're going to be talking about understanding the basics of the spouse annuity in railroad retirement. So let's jump in right away so let's look at the requirements for a spouse to claim an annuity. First would have to be the employee would have to be reached age 60 with 30 years of experience. So, then once the spouse reaches 60 she can also claim a full retirement spousal annuity would be if the employee reached the age of 62, with less than 30 years they can go get early retirement or reduce benefits as I like to call it retirement. The spouse can also claim retirement to that age, also at a reduced level. Another is an employee at retirement age has retired, the spouse, if they're caring for a child under the age of 18, they can claim an annuity. Also if you have a child with special needs, diagnosed by under the age of 22, you can also claim an annuity. And then finally, a divorced if you were divorced from a retired railroad employee and you were married for at least 10 years, you can also claim a spousal annuity. So as you're obviously, at the age of 62 you can claim the reduced benefits spousal annuity. So those are just basic four categories. Let's look at the payouts of the spousal annuities. So, at full retirement age, a spouse annuity will pay 50% of the employees railroad annuity. The tier one and tier two it will pay 45% of the employees Retirement annuity. And then there's reductions right early retirement age. So we're going to full retirement age of 67 coming up quite shortly for those for 1960 and later. So I just worked on these numbers. And on the tier one, you’ll want the spousal annuity if you retire at 62. When full retirement age 67 you'll have a 35% reduction on tier one the maximum reduction is 25% on the spouse annuity for early retirement at 62 and full  retirement at 67. So a quick example of the first two, let's look at 1630 employee. So you're 60 and 30 you're retiring your wife or your spouse is also 60, 30 years of experience, and just make the math easy let's say the employees tier one is $2,000 and their tier two is $1,000 a month. Right, the spouse annuity would be 50% of 2000 is 1000, and their tier two would be 45% of 1000 is 450. So that would give the monthly household income of $4,050 but let's let's also look at an early retiree office. Let's say somebody 62. Right. Both 62 the employee and the spouse. There's 20 years of experience, how would that look out so let's say this is full retirement age, this would be the payout so we had to put in the reductions of what what this would affect here. So, employees on tier one have a 30% reduction. So, this would be 1400. Employees here to have a 20% maximum reduction right so they're retired 62 full retirement age 67 at this point. So, this becomes 800. And then the spouse, their reductions are different than the employees are a little more severe would be 35% of this, so this would give you 650. All right, and then maximum reduction one here is 25% for a spousal annuity. So 25% reduction on 450 is give or take 338. All right, and then your household income on a reduced railroad retirement here is 3188. So this is an individual 62 years old with full retirement age of 67 taking reduced benefit retirement. So for the employee, and for the spouse so we're really trying to understand the spouse what we're doing here. I hope this gives you a little insight into spousal annuities. I'll talk about childcare and the divorce spouse annuities in another video. I didn’t want this one not too long. I hope you found this beneficial. In the meantime, stay safe, stay on track, and please subscribe to my YouTube channel when you get a chance, take care, bye.

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