Will My Social Security Benefit Result in a Railroad Retirement Overpayment?

Welcome, everyone, to another session of the Highball Advisors Railroad Retirement whiteboard. I'm John McNamara from Highball Advisors, and today we'll be discussing the intersection of social security and railroad retirement. It's crucial to understand how these two are closely linked because mismanaging them can lead to penalties and complications when it comes to collecting benefits from both agencies.

Let's focus on the tier one portion of railroad retirement, which closely resembles social security. Tier two is a separate entity, so we won't delve into that today. Tier one is based on 35 years of your social security non-railroad years and railroad years. This calculation determines your tier one number. Your social security number, on the other hand, only considers your non-railroad years, and you need at least 10 quarters to qualify for social security.

Tier two is solely based on your railroad years and doesn't factor into the tier one calculation. Essentially, tier one approximates what your social security benefit would be if railroad work were covered by social security. The formulas used are similar, with minor differences.

It's important to note that your tier one benefit is reduced by the amount of any actual social security paid to avoid duplicate payments. This means that if you're receiving both social security and tier one benefits, the tier one amount will be adjusted accordingly.

According to social security law, if you're eligible for multiple benefits, you'll receive the higher of the two. This prevents "double dipping," where you receive benefits from both social security and railroad retirement simultaneously. For example, if you're entitled to a spouse's annuity and a survivor annuity, you'll only receive the higher of the two.

When filing for social security, it's crucial to inform the Railroad Retirement Board to avoid overpayments. Failure to do so can result in complications and the need to repay benefits received in error. This is especially important for spouses and widows/widowers who may be eligible for both social security and railroad retirement benefits.

There's a delay in the transfer of data between social security and the Railroad Retirement Board, so it's essential to keep them informed of any changes to your benefits or eligibility. This prevents situations where you unknowingly receive overpayments that need to be repaid later.

If you're approaching retirement or have questions about your railroad retirement benefits, feel free to reach out to me. Understanding the intricacies of these systems is crucial for maximizing your benefits. Don't forget to subscribe for more informative videos, and until next time, stay safe, stay informed, and take care. Goodbye, everyone!

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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.