Railroad Retirement Board Benefits Explained

In the 1930s, the nation’s leaders were concerned that pension programs were not sufficient to provide former railroad workers with adequate financial help after they retired. So Congress established a national Railroad Retirement system.

The Railroad Retirement Board (RRB) is now closely tied to the Social Security Administration (SSA). According to the Social Security Administration, the Railroad Retirement program and Social Security share several things in common but also have important differences in several areas, including the benefits that each program covers.

Railroad Retirement Benefits

Both RRB and Social Security offer retirement, disability, spousal and survivor benefits. These benefits are generally calculated in similar ways. But the benefits are not identical.

Tier I Benefits

Tier I benefits provided by the RRB are designed to take the place of Social Security. Thus, benefits under the two programs are very similar. However, some workers who have paid Railroad Retirement taxes will not receive benefits through the RRB. These include:

• Workers with fewer than 10 years of service in positions subject to railroad specific taxes
• Workers with fewer than 5 years of service after 1995

These workers are not vested under the Railroad Retirement program. Their accounts are moved into Social Security.

Retirement Benefits 

Tier I retirement benefits are generally comparable to Social Security benefits. They both use the same benefit formula, based on the highest 35 years of earnings. 

To be eligible for aged retirement benefits through RRB, a worker must meet one of the following requirements:

• At least 10 years in covered service for the railroad industry
• At least 5 years after 1995

Like Social Security retirement benefits, Railroad Retirement Board retirement benefits are generally first available at age 62, and full retirement age ranges from 65 to 67, depending on a recipient's birth year.

Benefit reductions for early retirement for workers with less than 30 years of service are the same as those for Social Security.

Differences Between RRB and Social Security Retirement Benefits

RRB retirement benefits differ from Social Security retirement benefits in two important ways:

• Early retirement reductions do not apply if the employee has at least 30 years of service in RRB-covered employment. These individuals can collect benefits as early as age 60 with no age-based benefits reduction.
  
  
• A supplemental annuity is payable if an employee had at least 25 years of service that began before Oct. 1, 1981 and has a current connection to the railroad. Eligibility for this annuity begins at age 60 if the employee has at least 30 years of creditable service, and at age 65 if the employee has 25 to 29 years of service. The fixed maximum amount of a supplemental annuity is $43 a month in 2021.

Disability Benefits

RRB and Social Security define total disability the same way and use the same formula to calculate the disability benefit. The annuity for total and permanent disability is payable at the full retirement age for any employee with at least 10 years of railroad service, or with 5 years of service after 1995 (with certain eligibility requirements).

In addition to the total disability benefit, RRB offers an occupational disability benefit that is not offered under Social Security. Occupational disability benefits cover disabled workers who cannot perform their regular job but could perform a different job.

Occupational disability is payable at any age to:

• Workers with at least 20 years of service and a current connection to the railroad industry
• Workers between age 60 and the full retirement age with at least 10 years of service and a current connection to the railroad industry.

Spousal Benefits 

Tier I benefits are available to spouses of employees qualifying for Railroad Retirement benefits. These annuities are equal to half of the worker's unreduced Tier I benefit, but can be reduced based on other factors.

You must meet one of the following requirements to be eligible for spousal benefits:

• A current marriage typically must be at least 1 year old
• The couple must have conceived a child and the spouse must cease any employment covered by RRB

Spousal payments are generally subject to the same age and service rules as retirement benefits. As with Social Security, a spouse can also receive benefits at any age if he or she is caring for a child under age 16 or a child who became disabled prior to age 22.

Divorced spouses are eligible for Tier I spousal benefits under the same conditions as those that apply to Social Security.

Survivor Benefits 

Tier I survivor benefits generally match the Social Security survivor benefit. For survivors to be eligible for RRB benefits, the deceased employee must have met one of the following requirements:

• At least 10 years of covered service
• 5 years of covered service after 1995
• Had a current connection to the railroad at the time of retirement or death

If the deceased does not meet these requirement, survivor benefits are transferred to Social Security.

Both Social Security and RRB pay survivor benefits to widows, widowers, divorced spouses, dependent parents and children who are under age 18; 18–19 years old and a full-time student (12th grade or below); or disabled prior to age 22.

Dependent grandchildren are also eligible for benefits if both parents are disabled or deceased.

Surviving divorced spouses are eligible to receive benefits if the marriage lasted at least 10 years, and they can also receive a payment for dependent children under age 16, or for a child in their care who became disabled prior to age 22 (with some restrictions).

Unemployment and Sickness Benefits 

Unlike Social Security, RRB offers benefits in cases of unemployment or sickness. Railroad employers pay an additional tax to fund this benefit.

Tier II Benefits

The biggest difference between RRB and Social Security is the Tier II benefit available for railroad workers. The Tier II benefit is designed to resemble a comparable private defined benefit pension, and are available to workers, current spouses and survivors.

What Is the Railroad Retirement Program?

According to the Social Security Administration, more than 80 percent of railroad workers were employed by companies with inadequate pension and disability plans in the 1920s. The Depression left many railroad workers in need of immediate assistance.

After years of legal wrangling, Railroad Retirement and Carriers' Taxing Acts were passed in 1937. This established a national Railroad Retirement program that comprised almost 50,000 private railroad pensions. The program covered employees for retirement and disability. In 1938, it added unemployment benefits.

In 1951, the Railroad Retirement and Social Security programs were linked to combine tax revenues and other funding. This relationship was strengthened in the following years.

Today, RRB is still an independent federal agency, headquartered in Chicago, with more than 50 field offices throughout the United States.  

Individuals covered by the Railroad Retirement Act pay higher retirement taxes than those covered by the Social Security Act, the RRB notes. Railroad retirement benefits are therefore higher than Social Security benefits, especially for employees who have 30 or more years of service.

Conclusion

The Social Security Administration notes that the Railroad Retirement Board and Social Security offer very similar benefits, based mostly on the coordination of RRB's Tier I benefits with Social Security benefits. Yet the two programs also include different benefit structure and funding, such as the RRB’s Tier II benefit.