Due to the Railroad Retirement Penalty/Tax you are paid in dollars worth only 87.5 cents. You pay federal income tax on a 100 cent dollar.Then you pay tax on your rrb income again when you retire! For this reason you do not make as much money as you think.
incomestream I am not sure what you are saying. We pay RR Teir 1 tax that is equal to Social Security tax. Then we pay a RR Tier 2 tax that is about 4 1/2%. So I guess you could say we are paid 95 1/2% of what we make. But we have a RR retirement that pays a lot more than Social Security and is in great fiancial shape. Since we decided to invest a small portion of our retirement money in the stock market, the fund has done great. We should be the model for Social Security.
OK 7.65 +4.5 =12.15----100 - 12.15 = 87.85 You pay fed tax on a dollar worth 100 cents. You receive 87.85 cents of each dollar.
As far as the financial shape we are down to about 250,000 employee's paying into the RRB It is safe to assume that less than half may be around in 8 or 10 years. When you take into account the one man crews and scabs taking the clerks and MOW jobs. People paying in versus people drawing ratio will be to low to be sustained.