Railroad Retirement Board
Railroad
Retirement Age Reductions
April 2007
Railroad
retirement benefits are subject to reduction if an employee with less than 30
years of service retires before attaining full retirement age. While employees
with less than 30 years of service may still retire at age 62, the age at which
full retirement benefits are payable has been gradually increasing since the
year 2000, the same as social security.
The following
questions and answers explain how these early retirement age reductions are
applied to railroad retirement annuities.
1.
What is the full retirement age for employees with less than 30 years of
service and is it the same for all employees?
Full retirement
age, the earliest age at which a person can begin receiving railroad retirement
or social security benefits without any reduction for early retirement, ranges
from age 65 for those born before 1938 to age 67 for those born in 1960 or
later, the same as for social security.
2.
How are the changes in the maximum age reduction being phased in?
Since 2000, the
age requirements for some unreduced railroad retirement benefits have been
rising just like the social security requirements. For employees with less than
30 years of service and their spouses, full retirement age increases from 65 to
66, and from 66 to 67, at the rate of two months per year over two separate
six-year periods. This also affects how reduced benefits are computed for early
retirement.
The gradual
increase in full retirement age from age 65 to age 66 affects those people who
were born in the years 1938 through 1942. The full retirement age will remain
age 66 for people born in the years 1943 through 1954. The gradual increase in
full retirement age from age 66 to age 67 affects those who were born in the
years 1955 through 1959. For people who were born in 1960 or later the full
retirement age will be age 67.
3.
How does this affect the early retirement age reductions applied to the
annuities of those who retire before full retirement age?
The early
retirement annuity reductions applied to annuities awarded before full
retirement age are increasing. For employees retiring between age 62 and full
retirement age with less than 30 years of service, the maximum reduction will
be 30 percent by the year 2022. Prior to 2000, the maximum reduction was 20
percent.
Age reductions
are applied separately to the tier I and tier II components of an annuity. The
tier I reduction is 1/180 for each of the first 36 months the employee is under
full retirement age when his or her annuity begins and 1/240 for each
additional month. This will result in a gradual increase in the reduction at
age 62 to 30 percent for an employee once the age 67 retirement age is in
effect.
These same
reductions apply to the tier II component of the annuity. However, if an
employee had any creditable railroad service before
The following
chart shows how the gradual increase in full retirement age will affect
employees.
Employee
Retires with Less than 30 Years of Service
--If the
employee was born in 1937* or earlier, his or her full retirement age** is 65
and the maximum annuity reduction at age 62 is 20%.
--If the
employee was born in 1938*, his or her full retirement age** is 65 years and 2
months and the maximum annuity reduction at age 62 is 20.833%.
--If the
employee was born in 1939*, his or her full retirement age** is 65 and 4 months
and the maximum annuity reduction at age 62 is 21.667%.
--If the
employee was born in 1940*, his or her full retirement age** is 65 and 6 months
and the maximum annuity reduction at age 62 is 22.50%.
--If the
employee was born in 1941*, his or her full retirement age** is 65 and 8 months
and the maximum annuity reduction at age 62 is 23.333%.
--If the
employee was born in 1942*, his or her full retirement age** is 65 and 10
months and the maximum annuity reduction at age 62 is 24.167%.
--If the
employee was born in 1943 through 1954*, his or her full retirement age** is 66
and the maximum annuity reduction at age 62 is 25%.
--If the
employee was born in 1955*, his or her full retirement age** is 66 and 2 months
and the maximum annuity reduction at age 62 is 25.833%.
--If the
employee was born in 1956*, his or her full retirement age** is 66 and 4 months
and the maximum annuity reduction at age 62 is 26.667%.
--If the
employee was born in 1957*, his or her full retirement age** is 66 and 6 months
and the maximum annuity reduction at age 62 is 27.50%.
--If the
employee was born in 1958*, his or her full retirement age** is 66 and 8 months
and the maximum annuity reduction at age 62 is 28.333%.
--If the
employee was born in 1959*, his or her full retirement age** is 66 and 10
months and the maximum annuity reduction at age 62 is 29.167%.
--If the
employee was born in 1960* or later, his or her full retirement age** is 67 and
the maximum annuity reduction at age 62 is 30%.
_______
*A person
attains a given age the day before his or her birthday. Consequently, someone
born on January 1 is considered to have attained his or her given age on
December 31 of the previous year.
**If an
employee has less than 10 years of railroad service and is already entitled to
an age-reduced social security benefit, the tier I reduction is based on the
reduction applicable on the beginning date of the social security benefit, even
if the employee is already of full retirement age on the beginning date of the
railroad retirement annuity.
4.
What are some examples of how this will affect the amounts payable to employees
retiring before full retirement age with less than 30 years of service?
Take the
example of an employee born on
Upon retirement
at age 62, the employee's tier I benefit would be reduced by 25 percent, the
maximum age reduction applicable in 2012. This would yield a tier I monthly
benefit of $900; the employee's tier II benefit would also be reduced by 25
percent, providing a tier II amount of $600 and a total monthly rate of $1,500.
However, if the employee had any rail service before
As a second
example, take an employee born on
5.
How are railroad retirement spouse benefits affected by this change?
If an employee
retiring with less than 30 years of service is age 62, the employee's spouse is
also eligible for an annuity the first full month the spouse is age 62. Early
retirement reductions are applied to the spouse annuity if the spouse retires
prior to full retirement age. Beginning in the year 2000, full retirement age
for a spouse gradually began to rise to age 67, just as for an employee,
depending on the year of birth. While reduced spouse benefits are still payable
at age 62, the maximum reduction will be 35 percent by the year 2022. However,
if an employee had any creditable rail service prior to
Take for an
example the spouse of a railroader with less than 30 years of service, none of
it prior to
The following
chart shows how this will affect the spouses of railroad employees if the
employee retires with less than 30 years of service.
Spouse Age
Reductions
--If the
employee retires with less than 30 years of service and the employee's spouse
was born in 1937* or earlier, the spouse's full retirement age** is 65 and the
spouse's maximum annuity reduction at age 62 is 25%.
--If the spouse
was born in 1938*, the spouse's full retirement age** is 65 years and 2 months
and the spouse's maximum annuity reduction at age 62 is 25.833%.
--If the spouse
was born in 1939*, her or his full retirement age** is 65 and 4 months and the
maximum annuity reduction at age 62 is 26.667%.
--If the spouse
was born in 1940*, her or his full retirement age** is 65 and 6 months and the
maximum annuity reduction at age 62 is 27.50%.
--If the spouse
was born in 1941*, her or his full retirement age** is 65 and 8 months and the
maximum annuity reduction at age 62 is 28.333%.
--If the spouse
was born in 1942*, her or his full retirement age** is 65 and 10 months and the
maximum annuity reduction at age 62 is 29.167%.
--If the spouse
was born in 1943 through 1954*, her or his full retirement age** is 66 and the
maximum annuity reduction at age 62 is 30%.
--If the spouse
was born in 1955*, her or his full retirement age** is 66 and 2 months and the
maximum annuity reduction at age 62 is 30.833%.
--If the spouse
was born in 1956*, her or his full retirement age** is 66 and 4 months and the
maximum annuity reduction at age 62 is 31.667%.
--If the spouse
was born in 1957*, her or his full retirement age** is 66 and 6 months and the
maximum annuity reduction at age 62 is 32.50%.
--If the spouse
was born in 1958*, her or his full retirement age** is 66 and 8 months and the
maximum annuity reduction at age 62 is 33.333%.
--If the spouse
was born in 1959*, her or his full retirement age** is 66 and 10 months and the
maximum annuity reduction at age 62 is 34.167%.
--If the spouse
was born in 1960* or later, her or his full retirement age** is 67 and the
maximum annuity reduction at age 62 is 35%.
_____
*A person
attains a given age the day before his or her birthday. Consequently, someone
born on January 1 is considered to have attained his or her given age on
December 31 of the previous year.
**If the
employee has less than 10 years of railroad service and the spouse is already
entitled to an age-reduced social security benefit, the age reduction in her or
his tier I will be based on the age reduction applicable on the beginning date
of the spouse's social security benefit, even if the spouse is already of full
retirement age on the beginning date of her or his railroad retirement annuity.
6.
What age reductions are applied to employees who retired with 30 years of
service prior to 2002?
Employees with
30 or more years of creditable service are eligible for full age and service
annuities the first full month they are age 60, if their annuities begin
However, early
retirement reductions are applied to the tier I portion of an employee's
annuity if the employee first became eligible for a 60/30 annuity
7.
Are age reductions applied to employee disability annuities?
Employee
annuities based on disability are not subject to age reductions except for
employees with less than 10 years of service, but who have 5 years of service
after 1995. Such employees may qualify for a tier I benefit before retirement
age based on total and permanent disability, but only if they have a disability
insured status (also called a "disability freeze") under Social
Security Act rules, counting both railroad retirement and social security-covered
earnings. Unlike with a 10-year employee, a tier II benefit is not payable in
these disability cases until the employee attains age 62. And, the employee's
tier II benefit will be reduced for early retirement in the same manner as the
tier II benefit of an employee who retired at age 62 with less than 30 years of
service.
8. Do
these changes also affect survivor benefits?
Yes. The
eligibility age for a full widow(er)'s annuity is
also gradually rising from age 65 for those born before 1940 to age 67 for
those born in 1962 or later. A widow(er), surviving
divorced spouse or remarried widow(er) whose annuity
begins at full retirement age or later will generally receive an annuity
unreduced for early retirement. However, if the deceased employee received an
annuity that was reduced for early retirement, a reduction would be applied to
the tier I amount payable to the widow(er), surviving
divorced spouse or remarried widow(er). The maximum
age reductions will range from 17.1 percent to 20.36 percent, depending on the
widow(er)'s date of birth. For a surviving divorced
spouse or remarried widow(er), the maximum age
reduction is 28.5 percent. For a disabled widow(er),
disabled surviving divorced spouse or disabled remarried widow(er), the maximum reduction is also 28.5 percent, even if
the annuity begins at age 50.
9. Do
these increases in full retirement age also apply to the earnings limitations
and work deductions governing benefit payments to annuitants who work after
retirement?
Like social
security benefits, railroad retirement tier I and vested dual benefits paid to
employees and spouses, and tier I, tier II, and vested dual benefits paid to
survivors are subject to deductions if an annuitant's earnings exceed certain
exempt amounts. These earnings limitations and work deductions apply to all age
and service annuitants and spouses under full retirement age regardless of the
employee's years of service. Although employees retiring after 2001 at age 60
with 30 years of service have no age reduction, these earnings limitations and
work deductions still apply until they reach their full retirement age. These
earnings limitations also apply to survivor annuitants, with the exception of
disabled widow(er)s under age 60 and disabled
children.
Likewise, while
special earnings restrictions apply to employees entitled to disability
annuities, these disability earnings restrictions cease upon a disabled
employee annuitant's attainment of full retirement age. This transition is
effective no earlier than full retirement age even if the annuitant had 30
years of railroad service.
The additional
deductions applied to the annuities of retired employees and spouses who work
for their last pre-retirement non-railroad employer continue to apply after the
attainment of full retirement age.
10.
How can individuals get more information about railroad retirement annuities
and their eligibility requirements?
Employees
should contact the nearest field office of the RRB for information or refer to
the RRB's Web site at www.rrb.gov
<http://www.rrb.gov/>.
Persons can
find the address and phone number of the RRB office serving their area by
calling the automated toll-free RRB Help Line at 1-800-808-0772, or from the RRB's Web site. Most RRB offices are open to the public
from
Public Affairs 312-751-4777
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