Not only do railroad conductors receive excellent wages, they get to participate in Railroad Retirement. It’s a system that is sort of similar to Social Security, but much better. All railroad workers get to participate in it. From Conductors to Trainmasters, and even maintenance workers and secretaries. If you work for a railroad, you get railroad retirement.
The key difference between railroad retirement and social security is the monthly benefit. In 2013, the average retirement benefit of a career railroad worker was $3,080 a month. This is compared to the average social security benefit of $1,270 a month. Spousal benefits also fare much better at $915 a month under railroad retirement compared to $615 under social security.
The additional benefit comes from railroad payroll taxes. There are two tiers that are paid out of a railroaders paycheck each week. I’ll explain
They are called Tier 1 and Tier 2.
Tier 1 is comparable to social security. You pay 6.2% and your employer pays 6.2% (on the first $118,500 of wages).
Tier 2 is what sets railroad retirement apart. On your first $88,200 of wages, you pay 4.9% and your employer pays a whopping 13.1%.
As you can see, much more is paid into your retirement thus the much higher benefit.
The Railroad Retirement system also pays disability benefits for railroaders unable to work. The average disability benefit was $2,885 in 2013. Social security was much lower at $1,210 monthly.
Not only is the money much better, but railroaders don’t have to wait until they are 67 years old to get their full benefits. Railroad workers with 30 years of service (or more) are eligible to receive their full annuity at the age of 60. Workers with less than 30 years of service are able to receive benefits at the age of 62.
Many new railroaders have trouble understanding the system, but it is actually quite simple. The biggest thing to take note of, is the additional 4.9% that will be taken out of your pay check for Tier 2. But you’ll be making so much money anyway, it won’t be a big deal.