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Railroad Credits Used For Both Tier 1 & Tier 2
(Posted October 10, 2001)
Question 139: I'm planning to retire in a couple of months. I received an estimate showing that three quarters of my Railroad Retirement benefit will come from Tier 1,with only one quarter from Tier 2. I have 31 years of railroad work and only 7 years under Social Security. Shouldn't most of my retirement come from Railroad Retirement (Tier 2), not from Social Security (Tier 1)?
Answer: Most of your retirement benefits will come from your railroad work. Your Tier 1 is based on your combined Railroad Retirement and Social Security earnings; your Tier 2 is based only on your railroad credits.
You may be confused because the Tier 1 is calculated like a Social Security benefit but it is based on your earnings under both programs.
By the way, the ratio of Tier 1 to Tier 2 (3:1) sounds very typical. Most of the Railroad Retirement benefit is normally derived from Tier 1.
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