Discover how railroad retirement increase in benefits experienced a boost in January 2024, aligning with changes in the Consumer Price Index (CPI). This insight delves into the impact on tier I and tier II portions of annuities, shedding light on adjustments and their significance.
Railroad Retirement increase
Railroad retirement benefits, akin to social security, were increased in January 2024, in tandem with the rise in the Consumer Price Index (CPI) from the third quarter of 2022 to the corresponding period of year 2023. This increase impacts both the tier I and tier II portions of the annuity.
Specifically, the tier I portion, mirroring social security benefits, will see a boost of 3.2 percent, corresponding to the percentage of the CPI rise.
In January 2024, the tier II portion of railroad retirement annuities will rise by 1.0 percent, equivalent to 32.5 percent of the CPI increase. This will roughly offset the purchasing power of your dollar by a third.
However, vested dual benefit payments and supplemental annuities from the Railroad Retirement Board (RRB) remain unaffected by CPI adjustments. This adjustment comes after an 8.7 percent increase in the tier I portion and a 2.8 percent increase in the tier II portion of railroad retirement annuities in January 2023.
Railroad Retirement increase for spouse, widow, widower
In January 2024, the average regular railroad retirement employee annuity seen a $86 monthly increase to $3,450. Combined annuities for an employee and spouse rise by $120 monthly to $4,980.
For eligible aged widow(er)s, the average annuity rises by $51 monthly to $1,862. However, widow(er)s under the Railroad Retirement and Survivors’ Improvement Act of 2001 won’t receive annual cost-of-living adjustments until their annuity matches the prior law’s amount.
This affects nearly 32 percent of widow(er)s on the RRB’s rolls. If a railroad retirement or survivor annuitant receives additional government benefits, such as social security or a public service pension, any increase offsets the tier I benefit.
However, tier II increases aren’t affected. If a widow(er) under the 2001 law also gets a higher government benefit, their railroad retirement survivor annuity may decrease.
Conclusion
In late December 2023, the RRB will send notices to all annuitants detailing their January 2024 annuity rates. These letters serve not only to inform recipients of their upcoming payments but also to confirm eligibility for income-based government programs throughout the year.
In January 2024, railroad retirement benefits underwent notable adjustments, reflecting shifts in the CPI. From tier I to tier II portions, these changes affect annuitants differently, shaping their financial landscape. As the Railroad Retirement Board issues notices detailing the new rates, annuitants gain clarity on their income and potential eligibility for government programs.