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Answers are provided by Robert S. Kaufman
Railroad Work Began After Getting Social Security Coverage
(Posted November 4, 2005)
Question 559: In April 2006 I will be 62 with 7 years at the railroad. From 1965 to 1999 I worked in private industry. The latest estimate from Social Security shows that I would receive approximately $1400 with early retirement and $2000 with normal retirement.
I have the following questions:
1. If I continue working past 62 at the railroad, can I start to collect Social Security? Are there any penalties?
2. What will my Social Security benefits be based on?
3. What happens when I retire from the railroad & stop working? Do additional benefits from the Railroad Retirement kick-in?
4. I was told that benefits start in January of the year you can retire. Is this true?
Answer: I'll answer your question in the same order as you have asked them:
1. You can draw your Social Security benefit on a reduced basis at 62. However, there is an earnings ceiling & if you earn more than that amount, your benefits will be further reduced by $1 for each $2 that you earn above the ceiling. For example, for 2005 the earnings ceiling is $12,000. It will be increased for 2006 to account for the increase in average earnings.
As a practical matter, if you have considerable earnings from railroad employment, you may not receive the social security benefit you are expecting until your earning falll below the ceiling.
2. Your Social Security benefit will be based on your earnings under the Social Security system before you started railroad work. Usuall the 35 years of highest earnings are used.
3. When you retire from the railroad, you will be entitled to Railroad Retirement in addition to your Social Security benefits. However, the Tier 1 of your Railroad Retirement benfit will be reduced by the amount of your Social Security benefit.
4. Earnings restrictions apply until the month you reach your full retirement age. For people born after 1938, it increased on a sliding scale & is currently at 65 and a half for persons born in 1940.
There is a higher earnings ceiling beginning with January of the year in which you will reach your full retirement age. Depending on your earning at that time you may receive higher payments for the months immediately preceeding the month you reach the full retirement age.
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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