Railroad Retirement Benefits vs. Social Security Benefits

Back in the 1930s, there was a growing worry that the current pension programs were insufficient to provide retired railroad workers with the necessary support. Especially when they became older and unable to work. To address this concern, Congress set up a national railroad retirement system. If you are a retired railroad worker, you know your benefits differ from Social Security’s. Although both programs share some similarities, there are some notable differences in funding and benefit structure. Keep reading as we highlight some critical areas where these two retirement programs differ. 

Higher Taxes Withheld While on the Job 

Railroad employees who fall under the Railroad Retirement Act contribute more toward their retirement taxes than those under Social Security. As a result, railroad retirement benefits are generally higher, especially for employees who have served for 30 years or more. 

Railroad Retirement and Social Security Benefit Amount During Retirement 

Career railroad employees who retired at the end of 2017 received an average monthly age annuity of $4,030. On the other hand, those who retired at full retirement age under Social Security received an average monthly benefit of $1,855. When spouse benefits are included, the employee and their spouse receive $5,560 under railroad retirement coverage, compared to $2,780 under social security. Moreover, current career rail retirees with a supplemental annuity in their benefits receive an average total of over $5,590 monthly. 

Age Workers are Eligible for Retirement 

At 62, a worker can start receiving retirement benefits through social security, regardless of the duration of their employment history. However, retirement benefits are decreased if the individual retires before reaching full retirement age, regardless of their years of coverage. 

Railroad employees who have worked for 30 or more years are eligible for regular annuities based on their age and service starting from the first whole month they turn 60. Employees who have worked for less than 30 years become eligible for annuities when they turn 62. If a rail employee retires at 60 or above with 30 years of service after 2001 or 62 or above with 30 years of experience before 2002, no early retirement reduction applies. However, early retirement reductions are applied to annuities awarded before reaching full retirement age, the same as for social security. The full retirement age ranges from 65 for those born before 1938 to 67 for those born in 1960 or later. 

Social Security Benefits Not Offered to Railroad Retirees 

The Railroad Retirement Act has a provision that guarantees a minimum benefit for railroad families. This provision ensures that these families receive benefits equal to what they would receive if their earnings were covered by social security instead of railroad retirement laws. The guarantee covers situations where family members would be eligible for a social security benefit not provided under the Railroad Retirement Act. For example, suppose a retired rail employee has children who would qualify for a benefit under social security. In that case, their annuity can increase to reflect what social security would pay the family. 

Join NARVRE to PROTECT, PRESERVE, and PROMOTE Your Railroad Benefits 

A few more differences exist between the Social Security Act and the Railroad Retirement Act. Most notably, the remaining discrepancies include the taxes paid, the lump-sum death benefit provisions, and the monthly survivor benefits.  

If you work long enough for the railroad to receive retirement benefits, you can expect to live comfortably during your golden years. The National Association of Retired and Veteran Railway Employees (NARVRE) was established to help protect these retirement benefits from being tampered with. If you are an employee or retiree from the railroad industry, we strongly recommend becoming a NARVRE member. Our primary goal is to PROTECT, PRESERVE, and PROMOTE your railroad benefits. NARVRE units are located all over the United States, and the dues are extremely affordable. You can find your local unit on Facebook or speak to a local affiliate to join your chapter.