Will My Military Pension Be Reduced By Collecting Railroad Retirement?

How Does Military Retirement Affect Railroad Retirement Benefits?

Many railroad employees begin their railroad careers after serving in the military. A common question is whether receiving a military pension will reduce Railroad Retirement benefits—or vice versa.

Here's the question:

"What happens if you join the railroad after retiring from the military? How does that affect your retirement?"

The good news is that, in most cases, your military retirement pension and your Railroad Retirement benefits are separate programs.

Will Your Military Pension Be Reduced?

No.

If you are receiving a military retirement pension, working for the railroad and eventually qualifying for Railroad Retirement benefits does not reduce your military pension. Your military retirement continues according to the rules of your military service.

Will Railroad Retirement Benefits Be Reduced?

Generally, no.

Likewise, receiving a military pension does not reduce your Railroad Retirement benefits simply because you are collecting military retirement pay. Railroad Retirement is a separate retirement system with its own eligibility requirements and benefit calculations.

Military Veterans in the Railroad Industry

Military veterans make up a significant portion of the railroad workforce. According to the Association of American Railroads (AAR), approximately 17% of railroad employees have military backgrounds. Because of this, understanding how military service interacts with Railroad Retirement is an important part of retirement planning for many railroaders.

Additional Considerations

Although military retirement pay and Railroad Retirement benefits generally do not offset one another, there are situations where your military service itself may affect your Railroad Retirement record or eligibility. The impact depends on factors such as:

• When you served in the military.
• Whether your military service is creditable under Railroad Retirement rules.
• Whether you have sufficient railroad service to qualify for benefits.

Understanding these rules can help ensure you receive all the benefits for which you may be eligible.

Key Takeaway

If you retired from the military before beginning a railroad career:

• Your military retirement pension is generally not reduced because you work for the railroad.
• Your Railroad Retirement benefits are generally not reduced because you receive military retirement pay.
• The two retirement systems operate independently, although your military service may be relevant when determining certain Railroad Retirement credits.

If you have military service and are planning for Railroad Retirement, it's worth learning how your years of service may factor into your overall retirement strategy.

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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.