Is There Any Reason Why My Husband Wouldn't Want To Start Drawing His Social Security Now?

Apr 20 2018 - 4:17pm

My husband has worked for the Railroad since 2004. He is now 66 and plans to work a couple more years. He was told that he can actually collect Social Security now and once he retires the amount per month will be deducted dollar for dollar from his Tier 1. We are not sure if this is a smart move and are wondering if there is a tax liability difference between SS and Railroad Tier 1? Is there any reason that you can advise us on that would prohibit him from taking this now? Thanks!


I don't know how the taxation of Railroad (RR) benefits may differ from the taxation of Social Security (SS) benefits, but it sounds like what you've been told is correct. If your husband is now age 66 he would be able to draw his Social Security benefits regardless of how much he's earning, and if he later files for RR benefits his Tier 1 RR benefits would be offset dollar for dollar by the amount of his SS benefit.

Your husband best option may depend in part on the comparative amounts of his SS and RR tier 1 benefits. His SS retirement benefit rate would grow by 8% per year until age 70 if he defers drawing his SS benefits until then. But if his RR tier 1 rate would be higher than his age 70 SS rate, then it would probably make more sense to file for his SS benefits now. Our maximization software can help you and your husband explore and compare your various Social Security options, but it doesn't handle RR benefits.

Best, Jerry