Between Netflix dramas and bad press, working in Congress might seem like a walk in the park. Filibusters and government shutdowns tend to dominate the headlines. In fact, in 2021, the House of Representatives was scheduled to work just 166 out of 261 work days. In addition, while congressmen receive generous pension plans and generous healthcare insurance, they’re not raking in their full salary after leaving office. They do, however, receive some income after they retire.
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How Much Do Congressmen Make Before Retirement?
Most senators and representatives make an annual salary of $174,000. Those in leadership make a bit more. For example, the speaker of the House makes $223,500 and majority and minority leaders in the House and Senate make $193,400. Congressmen earn this annual salary for the duration of their terms. Senators serve six-year terms, while members of the House serve for two years. There are no term limits on either part of Congress.
Members also get allowances to pay their staff and cover office and travel expenses. Senators’ average allowance recently was $3,738,775, while representatives’ was $1,382,139. Congressmen are also able to deduct $3,000 a year for the living expenses they accrue while they’re away from their home states or congressional districts.
Senators and representatives’ salaries may seem high, but they’re actually on par with the salaries of esteemed professionals in the private sector, like doctors or lawyers. Plus, Virginia mortgage rates and the cost of living in D.C. are notoriously high. Members of Congress have not received a raise since 2009; prior to that, they were making $169,300 a year.
What Are Congressional Pensions Like?
Congressmen don’t reap their annual salary for life. They do receive generous retirement benefits though. The Atlantic estimates that when former House Speaker John Boehner (R-Ohio) retired he received an $86,000 annual pension.
A senator or representative’s retirement benefits are based on their plan, age and how long they served. No member of Congress is eligible for his or her pension unless he or she has served for at least five years. To collect their full pensions, congressmen must either be at least 62, be at least 50 with 20 years of service or have 25 years of service at any age.
By federal law, senators and representatives cannot earn their full salary in retirement. The most a congressman can earn after the leave office is 80% of their final salary. However, he or she would have had to have served 67 years to earn that top percentage.
What Retirement Plan Options Do Congressmen Have?
Prior to 1984, the Civil Service Retirement System (CSRS) covered all senators and representatives. In 1987, the Federal Employees’ Retirement System (FERS) replaced that plan. FERS is comprised of Social Security, basic annuity and the Thrift Savings Plan investment account. FERS automatically covers congressmen who began serving after September 30, 2003. Congressmen who began serving prior to that date may choose between FERS, CSRS, Social Security or some combination of those options.
The annuity amount is based on the highest three years of a member’s salary, which is then multiplied by a congressman’s years of service and an accrual rate. The accrual rate under CSRS is 1.5%, though this can jump to 2% after 10 years. Under FERS, the accrual rate is 1% for the first 20 years and 1.1% for each year after.
Why Do We Pay Congressmen?
Congressional compensation has always been a contentious issue. The founding fathers initially thought that the federal government did not need to compensate members of the government, who were typically well-to-do.
At first, under the Articles of Confederation, states compensated congressmen for their service and the amount congressmen received varied. A state could suspend a congressman’s salary if it became dissatisfied.
But later, the founding fathers changed their minds. In an effort to centralize government powers and to more equally compensate congressmen, the founding fathers decided to begin compensating congressmen from the federal treasury. In 1789, members of the Senate and the House began making $6 a day for each day they were in session, which was typically between four to five months a year.
Congressmen continued earning that rate for roughly the next 25 years, until Congress passed the Compensation Act of 1816, which changed congressmen’s compensation from $6 a day to $1,500 a year. Congress ended up repealing the law amid public outrage. But annual salaries later returned and have remained the norm since 1855.
Bottom Line
Senators and representatives make a good living and often have generous retirement benefits. However, congressmen are not paid their full salary for life, though their pensions are generous. As a result, they still have to save for retirement like everyone else. Congressmen aren’t eligible for pensions unless they’ve served at least five years. To collect their full pensions they must meet set age and terms of service requirements. The pensions of senators and representatives can never exceed 80% of their final salary.
Retirement Savings Tips for You
- If you don’t have plan to pay attention to your retirement savings, consider enlisting the help of a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Try to start saving as early as possible. The longer congressmen serve, the more they can receive in retirement. The same goes for civilians: The sooner you start saving for retirement, the more work compound interest can do for you.
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