Retiring With Less Than 360 Months of Service

Retiring with less than 360 months of service


An Employee with 60 to 359 months of service and an age of 62, can retire anytime.  The rule states that the first month a person is eligible for retirement would be the month after a person attains the age of 62, unless that person’s birthday is the 1st of the month, in which case they can retire on their birthday.


EXAMPLE - You turn 62 on December 5th.  The first date you can retire is January 1st.  If you wanted to take your 11 Personal Leave days in January and retire on January 12th, your retirement would be pro-rated for the month, with 19 days of retirement on February 1st.


For those who retire at less than 67 years of age, there is up to a 30% reduction in retirement at age 62.  Say a person was born in 1960 and planned to retire at age 62, there would be a 30% reduction to their retirement.  If the person waited until age 64 and a half, then the reduction would be 15%.  Every additional month that the person would wait to retire would see the reduction get smaller, until at the full retirement age of 67, there would be NO reduction.


If the person did not want to retire at their Full Retirement Age, they can continue to work until 70, raising their Tier 1 retirement by up to 30% at Age 70.  Each month that a person works on the Railroad, beyond their Full Retirement Age, will permanently raise their tier 1 Retirement.



Railroad Retirement is paid in two parts: 


Tier 1 is the same as Social Security.  This is based on your best 35 years of earnings, regardless of where you worked.  Railroad, Military, delivering papers, etc.  The total compensation is indexed to the year you are going to retires money, then divided by 420 to give a monthly average.  Then computations are made from that number.


Tier 2 is based on your best 5 years of Tier 2 Earnings.  If you are making the maximum Tier 2 earnings, then you would multiply your months of service by about $5.00 per monthly credit.

Example. 400 months of service X $5 = $2000 a month in Tier 2 Benefits.


Go online at WWW.RRB.GOV to set up an account and get an estimate of your RR Retirement annuity.



Here is what you need to do to get retired:


The RRB needs Original, or Certified Copies of your Birth Certificate, your significant others Birth Certificate, your marriage certificate and your DD-214 (if military).  These documents can be taken to ANY RRB Office where they will be scanned.  Or, take them to a place where the RRB is having meetings about Retirement, or you can call the RRB and they will tell you how and where to send your documents.   Your documents will be copied and returned.  -   You can do this at ANY age.  Get your documentation in the system EARLY!! -


Once you have chosen a date to retire, you can contact an RRB Office near you and arrange for an appointment to have an interview, either by phone or in person (post Covid).  The RRB will take your information, set your date for retirement and send you a form AA-1.  (If you have procrastinated about getting your documents to the RRB, you can arrange a way to get them scanned into the system at this time.) 



Insurance for Retiree and Dependents, with less than 360 service month credits


The working Iron Road Health Insurance challenger plan and those working under the National Plan will continue Insurances for one month after a month in which they had 7 work events, on 7 different days.  The same goes for Dependents as well.


Retirees and Dependents can go to Healthcare .gov to see what is available.  Or they can apply for the UHC GA-23111 Major Medical A, B or C, with coverage outlined below:


Monthly     Deduct      OOP     % of Coverage  - Pays at 100%

  1. $582  -  $1,000  -  $15,000  -  50%        -       Mammography and Pap Smear
  2. $755  -  $  750   -  $10,000  -  60%        -                "                        "         "
  3. $951  -  $  500   -  $  7,500  -  70%        -                "                        "         "


Plan A would cost $582 per month, with a $1,000 deductible.  Then pay at 50%, until you paid $15,000 out of pocket.  At this point it would pay 100 percent.   There is NO prescription benefit and the lifetime cap is $500,000.



Health Care can be continued under COBRA for 18 months:

Iron Road $741 per month for previously insured employee only

Nation Plan $917.16 per month for previously insured employee only

National Plan $917.16 for Spouse and $745.09 for all children


Vision is NOT covered.  You can COBRA this coverage for 18 months at $3.88 per month.

Dental is NOT covered.  You can COBRA this coverage for 18 months at $27.37 per month.

Cobra is continued thru United Health Care and must be paid monthly or quarterly to UHC.





First Retirement check will come the 1st of the month after the first full month you retire in.

Example - You retire on March 31.  Your first check will come on May 1st.

Example - You retire on March 15th.  Your first check would usually come on May 1st, for 16 days of pro-rated retirement and the month of April's retirement pay.   Although You may get a check on April 1st for 16 days.  It can work either way.




Have a spouse?


At the age of 62, and with at least one year of marriage, the spousal Retirement Annuity would be 50% of your tier 1 and 45% of your tier 2  There will be a reduction of retirement of up to 35% for spouses at age 62.  As with the employee age reductions, every month that a spouse does not start their Spousal Annuity, the reduction will get smaller, until at Full Retirement age, there is NO reduction.




Want to work in Retirement?


Once retired, you cannot make any money for any job that pays Railroad Retirement, either the Railroad or Union work, or you will lose your retirement annuity for the month.


If you want to work between the age of 62 and your full Retirement Age (66 -67), you can make up to $21,240 per year.  If you make more than that, you will lose $1 for every $2 you make.  You can make all $21,240 in one month, then not work again and have NO effect on your Retirement.


After your full retirement age (FRA), you can make all you want and it will NOT affect your Retirement at all, as long as you do not work for a Railroad, Union or your last Non-railroad previous employer.




Spouse wants to work in Retirement?


Rules are the same.  Will lose $1 of retirement for every $2 they make over $21,240 per year, until at full retirement age (FRA).  Must not work at their last non-railroad employer before retirement, without penalties.




Can Retired Employee or Spouse work the last job they had pre-retirement:


YES, but there is a stiff penalty.


Example:  Your spouse worked for Joann's Fabric shop before retirement.  After retirement she wants to occasionally work for Joann's.  The penalty will be to lose $1 for every $2 from the first dollar made, up to 1/2 of the monthly spousal Tier 2 Railroad annuity.


Employee would be the same.  Say an employee started working for Ace Hardware, occasionally, before they retired.  If the employee works for Ace after he retires, the rail will lose $1 for every $2 made, from the first Dollar, on their Tier 2 Railroad annuity, up to ½ of the benefit.  AND another $1, for every $2 of the spouses Tier 2 benefit up to ½. 


However, if the wife went to Target and the husband went to True Value after retirement, then they both could work up to the $21,240 per year, without losing any retirement.


The rule is – Lose $1 for every $2 of Tier 1 benefit made over $21,240, until the benefit is gone.

The rule is – Lose $1 for every $2 of Tier 2 benefit, from the first dollar, until ½ of the benefit is gone.


Previous Non-Railroad employer is defined as any employer that a rail worked for, within 6 months of retirement.  In addition, it would not be a good idea to have worked for the previous employer in the same year.



Can a Widow work at their last pre-retirement non railroad employer?


Yes they can and with no retirement reductions as long as they stay under the $21,240 per year.  And then no restrictions after Full Retirement Age.


Any questions




Larry J. Romine

Reliable Retirement Solutions



Updated 1-1-2023