Railroad Retirement vs. Social Security: What You Need to Know

At a time when most Americans are gravely worried about retirement security, it’s important for employees to know what rights and benefits they may have. The Railroad Retirement Board (RRB) recently released a series of questions and answers highlighting how the Railroad Retirement Act differs from Social Security.

Created in 1935 to provide benefits to the country’s railroad workers, the RRB allows for participants to receive retirement annuities at age 60 with 30 or more years of service. Social Security beneficiaries are not eligible until age 62, regardless of how long they have been paying into the system. The average pay-out to retired railroad employees at the end of fiscal year 2012 was $2,365, compared to $1,235 for Social Security. Spouses of rail employees took home an average of $880 a month under Railroad Retirement, while they received $590 under Social Security.

Railroad Retirement and Social Security have the same tax rates for retirement, Medicare and Medicaid, however, Railroad beneficiaries also pay Tier II taxes (4.4 percent for employees earning up to $84,300), which are used to finance Railroad benefit payments that go beyond Social Security levels.

The RRB also publishes a monthly report of railroad job openings. View March’s listing here.