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Early Retirement Can Affect Railroad Retirement Benefits
(Posted August 22, 2001)
Question 125: My railroad is offering a voluntary early retirement package. I'm 56 and I have 296 months of service. My husband is 55 and has 25 years in the Federal Civil Service Retirement System. If I accept early retirement, what would the impact be on my benefits and those of my husband? I plan to work under Social Security until I'm 66. Also, what are the most important things to consider in deciding whether or not to accept the early retirement offer?
Answer: If you accept early retirement from the railroad and begin working under Social Security, you will lose your "current connection" before you retire at 66. That means you will not receive a Supplemental Annuity. (With 25 years, the Supplemental Annuity would be $23 a month less any private pension paid to you by the railroad.)
Your husband would get a spouse's annuity when you retire. Because of his Civil Service Annuity, he probably will get a Tier 2 benefit but not a Tier 1 benefit.
Without a "Current Connection," any survivor benefits for your husband would be the responsibility of the Social Security Administration. This means your husband cannot receive a Tier 2 benefit, and because of his Civil Service Annuity he probably would not receive anything as a widower.
In considering early retirement, you should carefully work out a budget to see if you will have adequate resources to maintain your standard of living. Remember the federal income tax burden since you will be working. You also need to determine how your health insurance coverage will be changed. Buying individual coverage can be very expensive and sometimes provides limited benefits.
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice
to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the
law to the particular facts of this and similar situations.
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