Retirement benefits of Congress vs. you

Retirement » Retirement Benefits Of Congress Vs. You

Think you have a solid retirement plan? Check out the souped-up retirement benefits for Congress. Thanks to a six-figure salary and a relatively rich federal retirement system, elected officials enjoy benefits that are superior to those of most working Americans. Here's how average American workers compare to their elected officials.

Retirement benefits for Congress vs. typical Americans

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Pension benefits

What pension? The defined benefit plans enjoyed by your parents and grandparents seem to be an item for the history books. In the early 1980s, more than 80 percent of workers for large companies in the private sector participated in a pension plan. By 2011, the overall participation rate had dropped to 18 percent.

Source: U.S. Bureau of Labor Statistics.

Unless the pension option is declined, your congressman is enrolled in one of three federally funded pension programs with some impressive benefits. One of those programs currently pays retired members an average annual pension of nearly $40,000, not including Social Security. The other program pays an average annual pension of $70,620. Of course, pension benefits are based on salary and length of service, so pension amounts will vary among individuals.

Source: "Retirement Benefits for Members of Congress."

Health insurance

In 1988, 66 percent of large firms offered their employees retiree health benefits; today, just 25 percent of large firms and 4 percent of small firms (those with fewer than 200 employees) offer retiree health benefits. Among these firms, 88 percent offer benefits for early retirees younger than age 65, while 74 percent offer them to Medicare-age retirees. Bottom line: Most Americans don't have retiree health benefits outside of Medicare.

Source: "Employer Health Benefits 2012 Annual Survey."

Retired members of Congress can get health coverage through the Federal Employees Health Benefits Program, which covers more than 8 million federal employees, retirees and their families. The federal government pays between 72 percent and 75 percent of the premium cost. Once the exchanges are established under the Affordable Care Act, members of Congress will be required to participate only in those health plans.

Source: "Health Benefits for Members of Congress."

Retirement investments

In a 401(k) plan, workers can invest up to $17,500 for 2013 ($23,000 for those age 50 and older), with an average employer match of 4.1 percent. Average expense ratios paid by 401(k) investors for equity funds run 0.63 percent, according to the Investment Company Institute. That equates to a cost of $6.30 per $1,000 of investment, and doesn't include administrative fees. According to BrightScope, the total all-in cost of a 401(k) plan ranges from 0.2 percent for large plans to 5 percent for smaller plans.

Sources:, Investment Company Institute, BrightScope.

Members of Congress and federal employees are enrolled in the Thrift Savings Plan, a retirement investment plan similar to a 401(k). Lawmakers can contribute up to $17,500 to it ($23,000 for those age 50 and older), and the federal government matches contributions up to 5 percent, in addition to a 1 percent giveaway regardless of whether the employee contributes. The expense ratio of the TSP in 2012 was 0.027 percent, including management fees and administrative expenses. That total all-in cost equates to 27 cents per $1,000 of investment.

Sources: Congressional Research Service,

Social Security

Your Social Security retirement income varies, depending on how much you earned during your working years. The government estimates that those who earn a middle-class salary most of their life, culminating with taxable income of $44,826 in 2013, would retire at 65 with an initial annual benefit of $18,234. 

Source: 2013 OASDI Trustees Report.

Members of Congress get the same Social Security benefits as everyone else. But thanks to their relatively high salary, lawmakers get an initial benefit of $30,156 per year.

Source: Congressional Research Service.


Maximize your 401(k), and retire in style No matter where you are in your career, be sure to make the most of your workplace retirement plan.


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