Elected representatives and senators in the U.S. Congress receive substantial pension benefits for life. Congressional retirement pay is not typically a big election-year issue, but it might serve as evidence of a disconnect🔜 between lawmakers and the mainstream United States.

Congress Retirement: An Overview

The median 澳洲幸运5开奖号码历史查询:net worth for a member of Congress is over $1 million. The median wealth for an American household, in contrast, was $176,500 in 2022, the most recent data available. That means half of American households’ wealth is lower than that number, and half is higher. (This includes households that are in debt, with negative wealth.)

Congressional members are eligible for their own unique pension plans under the 澳洲幸运5开奖号码历史查询:Fe🌳deral Employees Retirement System (FERS), though there are other retirement options available, ranging from 澳洲幸运5开奖号码历史查询:Social Security to the 澳洲幸运5开奖号码历史查询:Civil Servi💃ce Retirement System (CSRS). Members of Congress are eligible for a pension dependent on the member’s age at retirement, length of service, and salary. The pension value can be up to 80% of the member’s final salary, which is $174,000 per year. At an 80% rate, that’s a pension benefit of $139,200. (The Speaker of the House has a salary of $223,500. The Senate President makes $193,400, as do the majority and minority leaders in the House and Senate.) All benefits are taxpayer-funded.

Additionally, members of Congress enjoy the same 澳洲幸运5开奖号码历史查询:Thrift Savings Plan (TSP) as all other federal employees, which is similar to a 401(k). Congressional contributions are matched up to 5% of salary per year, in addition to an extra 1% giveaway regardless of how much the congressperson contributes, if anything.

Few private employees have the option to contribute to an employer-sponsored defined benefit pension plan. Most have the option to contribute to a 401(k) or 403(b), while others may contribute to an 澳洲幸运5开奖号码历史查询:employee𒆙 stock ownership plan (ESOP) or some other retirement option. The median benefit for private pensions and annuities for those 65 and older was $11,040 per year in 2022, the most recent data available. For state and local government pensions, it was $24,980 per year.

Of course, some people receive both 澳洲幸运5开奖号码历史查询:Socia♍l Security and a private pension. The median Social Security benefit for those 65 and older was $18,520, so with a private pension, that’s an income of nearly $30,000 per year. As far as other retirement assets, the Federal Reserve found that the median retirement account balance in 2022 (the most recent data available) was $86,900 and the average balance was $334,000.

How Benefits Have Changed Over Time

Participation in 澳洲幸运5开奖号码历史查询:defined-benefit pension plans peaked in the private sector in the early 1980s. More than 80% of American employees who worked for large companies in the private sector contributed to a pension plan. By 2011, that rate for all private industry workers dropped to 18%. In 2001, 5% of the Fortune 1000 closed down or froze their defined-benefit retirement plans. By 2004, it was over double that (11%).

澳洲幸运5开奖号码历史查询:Defined contribution plans, like 401(k)s, have become more prominent. In 2023, 67% of private-sector workers had access to defined contribution plans. Only 15% could access defined-benefit plans. Of these, 49% and 11% of workers participated, respectively.

Increasingly, American workers are forced to rely on 401(k) plans, 澳洲幸运5开奖号码𓂃历史查询:individual retirement accouܫnts (IRAs), and Social Security for their retirement. Among these, only Social Security provides a 澳洲幸运5开奖号码历史查询:guaranteed minimum pa🐼yment in retirement, and even those benefits seem uncertain, considering the massive unfunded future liabilities faced by the U.S. government.

Previous Pensions

Congress did not always receive a gold-plated pension. Before 1942, members of Congress did not receive a taxpayer-funded retirement plan. This early system was quickly scrapped after public outcry, however. A pension was put into place after World War II and eventually replaced by FERS in the 1980s. The congressional pension system has not changed much since September 2003, after which all incoming representatives were no longer able to decline FERS.

During and After the Financial Crisis

Unfortunately, the once-promising 401(k) era failed to live up to its promise after unrealized gains were wiped out by the 2007–2009 recession, tꦬhough some of the lost retirement wealth from 2009 recovered quickly. By 2011, the average retirement accou𝔍nt balance increased by 7%.

Those gains were conspicuously concentrated among the wealthiest Americans. Approximately 45% of workers saw declines in the value of their retirement assets to the tune of thousands of dollars from 2009 to 2011, despite the fact that the S&P 500 grew approximately 54% over that period.

The Bottom Line

There are multiple retirement plan options for a member of the U.S. Congress. Every member has access to sev👍eral plans, and their defined benefits are not negatively impacted by stock market recessions.

Congress also has the unique position of determining its own benefits without having to worry about turning a profit—a private company may have to freeze its pension plan or perform a buyout if it experiences balance sheet problems, but the U.S. Congress must only appropriate tax dollars. Even state and local government pensions are often limited by balanced budget amendments or the tolerance of local taxpayers.