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VIDEO: Working While Collecting Railroad Retirement

Tier 1 Tier 2 Video Retirement Financial Planning

Transcript:

Welcome everyone to the Railroad Retirement Whiteboard. My name is John McNamara with Highball Advisors. And today we're going to talk about going back to work after you started your railroad retirement. So you've started collected your annuity from railroad retirement, and you decide you want to go back to work, right? So what's the effect on your railroad retirement annuity by going back into the workforce? So I broke it down into a couple of different cases, and I'm sure there's other cases, but this will give you a high level idea of the consequences of what you should be thinking about before you go back into the workforce. So let's take over on this side here, on my right, your left, reentering the railroad workforce. You're going back, you're going back to work for the railroad. Your buddy calls you up from the railroad, says, "Hey, we need you back here. We're short staffed," whatever. You decide to go back in, even though you're retired and collecting your railroad retirement.

So your annuity would stop automatically. And then you would start contributing back into the railroad retirement benefits. So that would stop automatically. Spouse annuity would also stop. All right. Now, these two I put down here, your divorce and your survivor annuity. I kind of lumped them actually together. So don't think of that as if you're divorced and you're receiving a divorce spouse annuity that, that would stop. That would only stop if you who are receiving the divorce spouse annuity went to go work for a railroad. Same with the survivor annuity. They won't take your annuity away but if the survivor goes and goes into work for the railroad, that would stop. So I shouldn't say take away. Really it just stops it and then it would continue to grow later on.

All right, so that's reentering the railroad workforce. Now, let's go into reentering the non rare over force. You've retired from the railroad and now you're going to go get another job at the Home Depot or kind of go become whatever, go work for General Electric, whatever it is. Okay, so you have the two parts of the railroad retirement annuity, as I always say, tier one and tier two. So tier one, so below your full retirement age. Now that's very important. Full retirement age, that's a social security term and that's what applies to railroaders, is the social security term. So full retirement age, even though you say, "Oh, I'm 60 and 30 full retirement." Yes, that's for your railroad retirement annuity but not for under the social security laws. So their full retirement age. As we know, anybody born after 1960 is 67 years old and then it kind of goes down before 1960, down to the bottom of 65. So below full retirement age.

Okay, you can make up to $17,640. These are 2019 numbers, so if you're watching 2020, these numbers would be updated. For every dollar over that amount, 17,000, for every $2, or I should say, you lose $1 in benefits. And then when you reach full retirement age, so once again, we'll use the number, we'll say, 67's full retirement age for people born 1960 and over, you could make up to $46,920, and then for every $3 earned after that you will lose $1. So that's just the tier one. Very important to remember, not 60 and 30, it's use the social security, 67 years old for you people born over 1960. That's when they talk about full retirement age. Tier two, okay, when you're reentering the non-railroad workforce. You've retired from the railroad and now you're going to work for a non-railroad. There's no reduction in your tier two benefits. No reduction in your tier two benefits. Very, very important.

Now let's continue on. This gets a little trickier here. So let's say you've left the railroad. I'll just use an example, big example guy. You've left the railroad and now for 10 years you've worked for General Electric and let's say you're 63 years old but you like working at General Electric and you want to keep working there. But then you say yourself, "You know what? I'm going to keep working at General Electric but I'm going to start collecting my railroad retirement also." So now you've worked for a non-railroad retirement employer, you've declared for railroad time, but you're continuing to work for that same, same, very important, non-railroad employer, they're going to penalize you. Obviously, you're always going to have this up here, the tier one.

But however, your tier two is $1 for every $2 up to 50% of your benefits. And as long as you continue to work for that employer, you're always going to have this penalty. So you're going lose up to 50% of your tier two benefits no matter what. Even if you're below these numbers here, they're still going to hit you on the tier two benefit. All right? You can't get out of tier two benefits. So once again, if you've left the railroad, you worked for an employer, you've declared for railroad retirement, but you continue to work for that employer, you're going to have this whack here on the tier two. All right, so that's the basic overview. I'm sure there's other examples and scenarios, but that's the basic overview of working after you've started collecting your railroad retirement annuity.

I hope you've found this very helpful. Please, please, please subscribe to my YouTube channel. It's down on the bottom left or bottom right of your screen, bottom left of my hand. That would be great. And please post say comments. I look at those. I appreciate the comments. Feel free if you want to reach out to me, discuss some of this. If you have any other financial planning issues, retirement issues, reach out to me. I'm here for you. You can always schedule a free 30 minute meeting or reach out to me at John at High Ball Advisors. I'd appreciate that. In the meantime, until next time, stay safe, stay on track, and take care. So long, everybody. Bye.

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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.