Monday, November 14, 2011

How To Make $11,000,000 in 20 Years.... Run For Congress!

How would you like to have a job that would allow you to:

  • Start with a minimum salary of $174,000 per year.
  • Retire after working as few as 5 years.
  • Receive guaranteed retirement pay for life as potentially high as $2,000,000.
  • Determine your own salary.
  • Increase your net worth by more than $10,000,000 in just 20 years.
  • Be the beneficiary of a savings account into which your employer pays 1% of your base salary, whether you contribute or not (Similar to a 401k with the exception that you aren't required to deposit even a penny.)
  • Have guaranteed premium health insurance for life and only pay 1/3 of the cost.
Well, you can. All you have to do is be elected to Congress.

With all the talk about the necessity to reduce government spending lately, there's one area I haven't heard any congressmen refer to in their pleas to cut spending on wasteful programs. Congressional pensions and benefit packages.

To start with, Congress is made up of a staggering amount of men and women who individually have a net worth in the millions (in some cases, tens of millions) of dollars. I blogged about the number of millionaires in Congress who enjoy cushy health insurance plans at the cost of the American tax payer; you can read it here:

We know that for the most part, it takes great wealth to run for office on the national level.  I don't begrudge anyone's hard earned wealth. I do, however, have a problem with my tax dollars paying a lifelong pension that greatly exceeds the salary they earned while serving. Keep in mind that a pension is NOT the same as a retirement plan... so while most of Americans' 401k plans have taken painful hits over the past few years as our economy has been in a downward spiral, congressional pension plans haven't wavered.  Like most retirement plans, a congressman's pension increases the longer they serve. No wonder we have so many die-hard career politicians clinging to their seats, no matter the cost. I would, too! Especially given that the benefits that come with these pension plans prove to be double - sometimes triple - those of regular retirement plans.  Naturally, there's a COLA (cost of living adjustment) raise each year..... that just happens to be a larger increase than those offered in private sector. And while most retirement plans are calculated by averaging an employee's 5 largest yearly salaries, then adding 1.5%,  (sit down for this...) Congressional pensions are formulated by averaging the THREE, not five, highest yearly salaries, plus 2.5%.  If you need a reminder of where all this money comes from, it's your pocket.  Private (and most public) sector employees are eligible for retirement at age 65 after working the required number of years. In comparison, one can retire from Congress at the age of 62 after only FIVE years of service...  Seriously?!? Or at the ripe, old age of 50 if they've put in 20 years.... Or at ANY age after they have put in 25 years... And that goes for their staffers, too. Um.....where do I sign up?

And that's not all.  Not only does Congress get to live for the rest of their lives on a grossly inflated (tax-funded) pension, they also enjoy cushy tax-deferred savings plans..... of which, TAX PAYERS match almost dollar for dollar. Or more. As I mentioned earlier, this is similar to a 401k plan. The difference is that employees are required to deposit into their own 401k. Members of Congress aren't required to deposit any amount into their "Thrift Savings Plan". Must be nice to be able to save other people's money for your own retirement <rolls eyes>.

As for health insurance, members of Congress are given a wide variety of providers and plans from which to choose; most of which are far superior to the private plans available to the American public.  There's a widespread myth that members do not pay for these plans, but in fact, they do.  A whopping 1/3.  You and I pay the remaining 2/3 for them.  For life.  Multimillionaires pay 1/3 of their monthly premium....and we pay the rest. Call me crazy, but last time I checked, being a millionaire means you have a lot more money than me. This is in addition to Medicare, by the way...

According to the National Taxpayers Union, a LARGE number of men and women who have retired from Congress will draw $1,000,000 after retirement and some may even draw as much at $2,000,000. WHAT?

Members of Congress also receive Social Security, and like most private sector employees, pay around 6.2% of their salary up to $106,800 into the system.  To be fair, I should point out that they also pay into the Civil Service Retirement and Disability Fund, from which their pensions are paid.  About 1.3% of their salary.  Really...a whopping 1.3%. If you're wondering where the other 98.7% of monies in the fund come from, again... your pocket. Tax dollars.

What's even better is that, as I said earlier, these benefits are guaranteed. And by "guaranteed" I mean not even a crime conviction will strip a congressional retiree of their benefits. The late Dan Rostenkowski (D-Illinois..... surprise) who chaired the House Ways and Means Committee under Reagan was asked to step down after an indictment for several charges including embezzlement. He accepted a plea agreement, plead guilty to the lesser charge of mail fraud, was convicted and sentenced to 17 years in prison (15 of which he served).  All the while, law-abiding American citizens continued to pay Rostenkowski's $96,000+ per year pension. And he isn't alone. According to the National Taxpayers Union, we shell out $800,000 every year in pensions to congressmen CONVICTED OF CRIMES. That includes Illinois crook (I mean governor) Rod Blagojevich's pension of $15,000 per year (plus health insurance, plus savings plan). Thankfully, in June of this year a bill (Congressional Integrity and Pension Forfeiture Act of 2011) was introduced that would prohibit convicted congressmen from receiving pension pay. Whether or not it will pass is the question.

In stark contrast to the guaranteed congressional pensions that average around $60,972 per year, less than four out of ten Americans will receive a pension after retirement. Those that do aren't guaranteed. The lucky ones (less than 15%) will receive an average pension of about $7,500. That's fixed for life, with no yearly COLA increase like those in Congress' pensions.

Add to all of this the privilege of being able to LEGALLY buy or sell stocks and participate in shady land deals based on insider trading information in Congress, and you've got one lucrative job. No wonder none of them ever leave. And when they finally do, wow.... Take former Speaker of the House Dennis Hastert. Hastert's net worth when he was elected in 1986 was around $300,000. When he retired in 2007, his net worth was in excess of $11,000,000, thanks to a $207,000,000 earmark he inserted into a federal highway bill for a parkway that just happened to be very close to some land he owned in Illinois (again, Illinois....shocker).

So, to recap....
Most employees with private sector jobs work an average of 43 years and retire at age 67.
Congressmen are eligible for retirement after as few as 5 years at as young as age 50.

Most pensions are calculated by averaging the employee's 5 highest years' pay and adding 1.5%.
Congressional pensions are calculated by averaging the highest THREE years' pay and adding 2.5%.

The average yearly retirement pay for the Americans fortunate enough to have it is $7,500 (does not increase in time; remains $7,500 for life).
The average yearly pension for congressmen is $60,972 (increases yearly based on cost of living).

Americans are eligible for Medicare coverage at the age of 65. Most Americans on Medicare also purchase supplemental plans that they pay for out of their own pockets.
In addition to Congressmen being eligible for Medicare coverage at the age of 65, they also keep their plush health insurance plans, 2/3 of which are paid for by tax payers. Most of whom don't have health insurance themselves.

Most Americans who have 401k plans are required to deposit a minimum amount per year which their employer will match on different scales.
Congressmen are given "Thrift Savings Accounts" into which they may deposit funds that their employer (a.k.a. YOU and I) will match. They are not required to deposit any funds into these accounts, in which case their employer (yeah, us) will still deposit 1% of their base salary.

Soooooo...... about that whole "pay your fair share" thing....

Sources: National Taxpayers Union,,

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