Railroad Retirement Benefits will See a Significant Rise in 2023
On October 17, 2022, the Railroad Retirement Board issued a press release announcing a significant rise in benefits beginning in January 2023. Similar to social security benefits, the increase is due to a rise in the Consumer Price Index (CPI) from the third quarter of 2021 to the third quarter of this year.
In both the tier I and tier II portions of a railroad retirement annuity, cost-of-living increases are factored into the benefit calculations. As such, tier I benefits will increase by 8.7 percent, which corresponds to the CPI rise. This is the largest increase since 1981.
Tier II benefits will also increase by 2.8 percent, which is 32.5% of the CPI increase. Vested dual benefit payments and supplemental annuities paid by the RRB are not adjusted for the CPI change.
On average, the regular railroad retirement employee annuity will increase by $215 a month to $3,344 and the average of combined benefits for an employee and spouse will increase by $304 a month to $4,838. For aged widowers eligible for an increase, the average annuity will increase by $120 a month to $1,691. Of course, each individual annuitant’s increase will depend on their specific situation.
The RRB reported that aged widow(er)s being paid annuities under the Railroad Retirement and Survivors’ Improvement Act of 2001 will not receive the annual cost-of-living adjustments until their annuity amount is exceeded by the amount that would have been paid under prior law, counting all interim cost-of-living increases otherwise payable. This accounts for roughly 49% of all widow(er)s on the RRB’s rolls.
If a retiree or survivor receiving an annuity also receives a social security or other government benefit, such as a public service pension, any cost-of-living increase in that benefit will offset the increased tier I benefit. Tier II cost-of-living increases, however, are not reduced by increases in other government benefits. If a widow(er) is receiving an annuity under the 2001 law and is also entitled to an increased government benefit, his or her RRB survivor annuity may decrease.
The RRB has said that it will mail notices to all annuitants providing a breakdown of the annuity rates payable to them in January 2023.
For more information, please visit RRB.gov.