WASHINGTON — Two friends of labor — Democratic Senators Kent Conrad (N.D.) and Joseph Lieberman (Conn.) — say they will retire at the end of the 112th Congress in 2012. Conrad is completing his fifth six-year term; Lieberman completing his fourth six-year term.
These announcements follow the retirement announcement of Republican Sen. Kay Bailey Hutchison of Texas, the senior Republican on the Senate Commerce Committee, who said she will retire in 2012 when her third six-year term ends. The Senate Commerce Committee has oversight of many rail, transit, air and bus issues. She is considered a moderate Republican.
How long will you live after you retire, and will you have enough money to live on comfortably?
Good question. That’s why – before you retire – you should think about post-retirement economic security, because few things could be worse than money running out during what are supposed to be carefree years.
A balanced retirement portfolio should resemble a three-legged stool.
The first leg is your Tier I Railroad Retirement, Social Security or CalPERS (the California retirement system for public employees), plus Tier II Railroad Retirement and/or an employer pension.
The second leg is the equity in your home, plus your personal savings, such as certificates of deposit and mutual funds.
The third leg of this financial stool are annuities, IRAs, 401(k) plans and whole life insurance.
These three financial legs are the assets to support you through retirement. The fewer legs, or the lower value of any legs, could mean a less secure financial situation during retirement.
Determining available assets before you retire is essential. You may, for example, choose to wait another year or two before retiring and build up assets in one or more legs of your financial stool.
Younger members are wise to consider these financial legs long before they retire.
The UTU Insurance Association can help build the third leg of your financial stool prior to, and even during, retirement.
UTUIA whole life policies provide a death benefit while accumulating cash value. The death benefit protects your surviving family if you die; and the cash value becomes a source of tax-deferred savings available during your retirement years.
UTUIA annuities and individual retirement accounts (IRAs) earn guaranteed interest that is tax deferred until you draw down the balance. You may invest in UTUIA annuities up to age 85.
Existing IRAs and/or employer 401(k) plans may be rolled over into a UTUIA IRA.
To learn how the UTUIA can help make your retirement more secure, talk with a UTUIA field supervisor, call the UTUIA toll-free line at (800) 558-8842, or click here.
If you are planning to retire in the coming months, you are sure to have concerns and many more questions.
Understanding retirement benefits, Medicare and Medigap – and, especially, assuring you obtain all you are entitled to – is no simple task. There is help, however, and the UTU can help you.
Many of your pre-retirement questions can be answered at the UTU Internet home page, at www.utu.org by clicking on “UTU Alumni Association” (located along the top under “About UTU”).
See, for example, the article headlined, “Preparing for Your Retirement,” which provides advice on tasks to consider in the months before your actual retirement. The topics include, “Money and health,” “Medicare and more,” “Pension plans,” “Investment income,” “Monthly income,” information for UTUIA policy holders, and advice on documents you will need to complete or obtain before applying for certain retirement benefits.
Also provided are contact information – phone numbers and Web addresses – where additional retirement information (such as veteran’s benefits for surviving spouses) may be obtained.
A new addition to that the Alumni Association page is a link to UnitedHealthcare’s “Retirement Made Easy Kit,” crafted for railroaders about to retire.
For Bus and Aviation Department members, there is a link for Social Security information.
Don’t overlook information on joining the UTU Alumni Association, which will keep you in touch with other UTU retirees and continuing news about the UTU, your past employer and current events affecting airlines, the motorcoach industry and railroads.
Those nearing retirement also should click on the “Health Care” link in the grey tile area at the top of the UTU homepage at www.utu.org. You will find there additional links to information on health care benefits, disabilities and Medicare prescription drug benefits.
Advance planning is an important first step toward assuring smooth sailing toward a successful and enjoyable retirement.
When Art Anderson started working for passenger railroads, the Beatles were still together, and everyone still dressed up for work, according to the Chicago Sun-Times.
“Things are a lot more casual these days,” said Anderson, 59, who retires next month after 42 years, the last 20 as a Metra conductor. “You see very few people in a suit and tie anymore, and when you do, you assume they’re an attorney.”
Anderson started his career as a ticket clerk with the Chicago Union Station Co. 1968, after graduating from Senn High School.
(Anderson is a member of Local 281, Milwaukee.)
He moved through a variety of rail jobs, including work in the interlocking tower (where signals are controlled), control center jobs at Amtrak, assistant station manager between 1981 and 1985 and then station manager through 1988, putting him in charge of train operations for the terminal.
His worst day was when Robert Krabec, an off-duty security guard, shot Amtrak baggage handler Marvin Burton to death in 1985.
“I’d known both of these gentlemen since 1968, so it was sad,” Anderson recalled. “We’re all one big family there. I had to calm people down.”
The next year, the station was used for an imaginary shoot-out for the 1987 movie “The Untouchables.” The action was set in the Great Hall, with a baby carriage bumping down the staircase.
“Our police had it cordoned off, but you could see employees and patrons sneaking up as close to the ropes as they could to watch the filming,” Anderson remembered. “It showed up the station very nicely, and we had it all polished up.”
Unhappy with Amtrak management style, Anderson quit as station manager to join Metra in 1988. He became a conductor two years later, mostly for the Milwaukee District North Line to Fox Lake.
His work has included handling many emergencies over the years. Once while collecting tickets he found a passenger dead, slumped against a window. Anderson also has had to escort unruly passengers off the train.
Anderson has seen the aftermath of numerous accidents on the tracks. Conductors are in charge of the train and must go to the scene of an accident to see what happened.
“They seem to come in waves,” Anderson said. He recalled when his train struck two trespassers on Chicago’s Northwest Side, and then just a month later, a woman committed suicide at Devon Avenue. Then around Christmas of that year, the same train, with the same engineer, who had himself recently lost an adult son, hit an automobile. “I thought, oh my goodness, this is the fifth one in six months,” said Anderson, as he rushed off the train to the accident site.
Fortunately, the woman was alive and in good shape, so Anderson immediately called the shaken engineer, saying “‘She’s OK, she’s OK!’ I wanted him to be comforted that it hadn’t happened again.”
After a death on the railroad, “for a day or two you’re constantly thinking about it,” Anderson said. He said he has been able to handle the deaths without the counseling Metra offers, but he considers himself lucky that he has never been present for the death of a child. “That could be a different situation.”
Anderson said his fellow train workers were “very angry, without exception” over the May 7 suicide of former Metra executive director Philip Pagano, who stepped in front of a Metra train. “We believed that no good, professional, railroad man would ever involve his railroad and his employees in that manner,” Anderson said.
Railroading tends to run in families — Anderson met his wife Jo Ann when they both worked for Amtrak in 1971.
Their son Frank “didn’t want any part” of railroad work. But a funny thing happened. Frank met and married Janet, a woman from Mexico whose father was a conductor.
When she first visited Frank’s parents in Downers Grove, the first thing Art did was take her to the basement to show off his collection of old timetables, brochures and train books. Gratified by her polite interest, Anderson said, “That’s it, Frank, Janet gets my collection when I die!”
When Frank and Janet visited her family in Mexico, her father showed Frank his collection of locks, switch keys and other train hardware. “Her dad tells Frank in Spanish, ‘The rest of my family doesn’t care about this. You’re going to get everything when I die’.”
Anderson said there’s a “certain thrill about the railroad.”
“It gets in your blood,” Anderson said. “You feel a sense of accomplishment at the end of the day. You’ve taken 3,000 people safely to their destinations.”
(This item appeared June 21, 2010, in the Chicago Sun-Times.)
Employers and employees covered by the Railroad Retirement Act pay higher retirement taxes than those covered by the Social Security Act, so that railroad retirement benefits remain higher than Social Security benefits, especially for career employees.
The following questions and answers show the differences in railroad retirement and social security benefits payable at the close of the fiscal year ending September 30, 2009. They also show the differences in age requirements and payroll taxes under the two systems.
1. How do the average monthly railroad retirement and social security benefits paid to retired employees and spouses compare?
The average age annuity being paid by the Railroad Retirement Board (RRB) at the end of fiscal year 2009 to career rail employees was $2,690 a month, and for all retired rail employees the average was $2,125. The average age retirement benefit being paid under social security was over $1,160 a month. Spouse benefits averaged $795 a month under railroad retirement compared to $555 under social security.
The Railroad Retirement Act also provides supplemental railroad retirement annuities of between $23 and $43 a month, which are payable to employees who retire directly from the rail industry with 25 or more years of service.
2. Are the benefits awarded to recent retirees generally greater than the benefits payable to those who retired years ago?
Yes, because recent awards are based on higher average earnings. Age annuities awarded to career railroad employees retiring at the end of fiscal year 2009 averaged over $3,280 a month while monthly benefits awarded to workers retiring at full retirement age under social security averaged about $1,625. If spouse benefits are added, the combined benefits for the employee and spouse would approximate $4,550 under railroad retirement coverage, compared to $2,435 under social security. Adding a supplemental annuity to the railroad family’s benefit increases average total benefits for current career rail retirees to about $4,585 a month.
3. How much are the disability benefits currently awarded?
Disabled railroad workers retiring directly from the railroad industry at the end of fiscal year 2009 were awarded nearly $2,800 a month on the average while awards for disabled workers under social security averaged about $1,125.
While both the Railroad Retirement and Social Security Acts provide benefits to workers who are totally disabled for any regular work, the Railroad Retirement Act also provides disability benefits specifically for career employees who are disabled for work in their regular railroad occupation. Career employees may be eligible for such an occupational disability annuity at age 60 with 10 years of service, or at any age with 20 years of service.
4. Can railroaders receive benefits at earlier ages than workers under social security?
Railroad employees with 30 or more years of creditable service are eligible for regular annuities based on age and service the first full month they are age 60, and rail employees with less than 30 years of creditable service are eligible for regular annuities based on age and service the first full month they are age 62.
No early retirement reduction applies if a rail employee retires at age 60 or older with 30 years of service and his or her retirement is after 2001, or if the employee retired before 2002 at age 62 or older with 30 years of service.
Early retirement reductions are otherwise applied to annuities awarded before full retirement age — the age at which an employee can receive full benefits with no reduction for early retirement. This ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later, the same as under social security.
Under social security, a worker cannot begin receiving retirement benefits based on age until age 62, regardless of how long he or she worked, and social security retirement benefits are reduced for retirement prior to full retirement age regardless of years of coverage.
5. Does social security offer any benefits that are not available under railroad retirement?
Social security does pay certain types of benefits that are not available under railroad retirement. For example, social security provides children’s benefits when an employee is disabled, retired or deceased. Under current law, the Railroad Retirement Act only provides children’s benefits if the employee is deceased.
However, the Railroad Retirement Act includes a special minimum guaranty provision which ensures that railroad families will not receive less in monthly benefits than they would have if railroad earnings were covered by social security rather than railroad retirement laws. This guaranty is intended to cover situations in which one or more members of a family would otherwise be eligible for a type of social security benefit that is not provided under the Railroad Retirement Act. Therefore, if a retired rail employee has children who would otherwise be eligible for a benefit under social security, the employee’s annuity can be increased to reflect what social security would pay the family.
6. How much are monthly benefits for survivors under railroad retirement and social security?
Survivor benefits are generally higher if payable by the RRB rather than social security. At the end of fiscal year 2009, the average annuity being paid to all aged and disabled widow(er)s averaged $1,285 a month, compared to $1,100 under social security.
Benefits awarded by the RRB at the end of fiscal year 2009 to aged and disabled widow(er)s of railroaders averaged approximately $1,725 a month, compared to about $890 under social security.
The annuities being paid at the end of fiscal year 2009 to widowed mothers/fathers averaged $1,595 a month and children’s annuities averaged $935, compared to $840 and $745 a month for widowed mothers/fathers and children, respectively, under social security.
Those awarded at the end of fiscal year 2009 averaged $1,620 a month for widowed mothers/fathers and $1,240 a month for children under railroad retirement, compared to $820 and $750 for widowed mothers/fathers and children, respectively, under social security.
7. How do railroad retirement and social security lump-sum death benefit provisions differ?
Both the railroad retirement and social security systems provide a lump-sum death benefit. The railroad retirement lump-sum benefit is generally payable only if survivor annuities are not immediately due upon an employee’s death. The social security lump-sum benefit may be payable regardless of whether monthly benefits are also due. Both railroad retirement and social security provide a lump-sum benefit of $255. However, if a railroad employee completed 10 years of creditable railroad service before 1975, the average railroad retirement lump-sum benefit payable is $990. Also, if an employee had less than 10 years of service, but had at least 5 years of such service after 1995, he or she would have to have had an insured status under social security law (counting both railroad retirement and social security credits) in order for the $255 lump-sum benefit to be payable.
The social security lump sum is generally only payable to the widow(er) living with the employee at the time of death. Under railroad retirement, if the employee had 10 years of service before 1975, and was not survived by a living-with widow(er), the lump sum may be paid to the funeral home or the payer of the funeral expenses.
8. How do railroad retirement and social security payroll taxes compare?
Railroad retirement payroll taxes, like railroad retirement benefits, are calculated on a two-tier basis. Rail employees and employers pay tier I taxes at the same rate as social security taxes, 7.65 percent, consisting of 6.20 percent for retirement on earnings up to $106,800 in 2010 and 1.45 percent for Medicare hospital insurance on all earnings.
In addition, rail employees and employers both pay tier II taxes which are used to finance railroad retirement benefit payments over and above social security levels.
In 2010, the tier II tax rate on employees is 3.9 percent and on rail employers it is 12.1 percent on employee earnings up to $79,200.
9. How much are regular railroad retirement taxes for an employee earning $106,800 in 2010 compared to social security taxes?
The maximum amount of regular railroad retirement taxes that an employee earning $106,800 can pay in 2010 is $11,259, compared to $8,170.20 under social security. For railroad employers, the maximum annual regular retirement taxes on an employee earning $106,800 are $17,753.40 compared to $8,170.20 under social security. Employees earning over $106,800, and their employers, will pay more in retirement taxes than the above amounts because the Medicare hospital insurance tax of 1.45 percent is applied to all earnings.