When Does My Spouse Annuity in Railroad Retirement Stop?

Greetings to all joining us for the latest edition of the Highball Advisors Railroad Retirement whiteboard series. I'm John McNamara, representing Highball Advisors, and today's focus centers on a topic of immense value – the spousal annuity. This component holds the power to significantly enhance your railroad retirement benefits, making it a pivotal consideration. If you're contemplating the idea of marriage, the spousal annuity's potential benefits might sway your decision. So, without further ado, let's delve into the intricacies of the spousal annuity, understanding its nuances, exceptions, and implications.

To demystify the concept, the spousal annuity is essentially 50% of the tier one portion of the employee's annuity, accompanied by 45% of the tier two portion. However, there are specific circumstances in which it is not payable, as well as instances when it ceases. Understanding these scenarios is crucial, as they can have a lasting impact on your financial picture. Let's begin by outlining when the spousal annuity is not payable.

Firstly, the spousal annuity is not applicable when the railroader is actively employed. Furthermore, if the railroader remains associated with railroad employment, the spousal annuity remains out of reach. Should your personal railroad retirement annuity surpass the employee's annuity, you're not entitled to a spousal annuity. This situation arises frequently when both spouses have significant railroad service years. Lastly, the moment you become eligible for a survivor annuity that surpasses the spousal annuity, the latter is no longer payable. It's important to note that all survivor annuities surpass spousal annuities, so this transition is almost inevitable.

Transitioning to instances when the spousal annuity ceases, it discontinues upon the passing of either the spouse or the employee. In the event of an employee's death, the spousal annuity transforms into a survivor annuity. A divorce brings an end to the spousal annuity as well, though nuances exist, explored in-depth in my other videos. Changes in your family structure also affect the spousal annuity, as it also supports qualifying children under the age of 18. If a qualified child is no longer under your care due to reaching adulthood or overcoming disability, the corresponding portion of the spousal annuity discontinues.

It's noteworthy that for individuals below 60 years of age, who receive a spousal annuity while caring for children, the annuity discontinues until both spouses reach 60 years of age. However, if the railroader has completed 30 years of service, the age drops to 60; otherwise, it remains at 62.

The significance of the spousal annuity cannot be overstated. Its potential to enhance your railroad retirement is substantial. Delving into these topics is a core component of my Boarding for Railroad Retirement process. Whether you're nearing retirement or are already in it, this personalized process provides tailored insights into maximizing your retirement benefits.

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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.