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What Weiner walks away with

After just 12 years on the job, the departing congressman gets hefty retirement benefits.

By MSN Money Partner Jun 17, 2011 4:08PM

This post comes from Jack Hough at partner site SmartMoney.

 

Anthony Weiner just resigned from the House of Representatives, his 12-year political career ended by Twitter indiscretion. In doing so, Weiner walks away with retirement benefits that are far more generous than what most workers with similar pay and length of service could ever hope to match.

 

Members of Congress are covered under the Federal Employee Retirement System, which features a pension-style plan at minimal cost to employees. They contribute less than 1% of pay, and contributions bear no relation to the benefits. Weiner, 46, has been a congressman for 12 years and has a recent salary of $174,000 (standard for both the House and Senate). After leaving office he has a couple of choices. He can begin taking discounted pension payments of about $25,000 a year starting at age 56 or wait until age 62 and collect about $35,000 a year.

For the average retirement investor, that's a benefit comparable to $1.2 million in the bank. With the 10-year Treasury yield at 2.9%, that's how much it would take to produce a guaranteed income of $35,000 a year.

 

Note that such "defined benefit" plans protect the recipient from having to worry about things that concern most investors, like stock market returns and interest rates. Over the past 12 calendar years the U.S. stock market has returned a meager 3.8% a year compounded. Savings yields are at historic lows.

 

A worker who socked away $12,000 of his own money in a 401k plan and received a $3,000 employer match and collected a 3.8% yearly return would have $231,000 after 12 years. Suppose such a worker left his job today and rolled over his 401k proceeds to a self-directed retirement account. Also, suppose future returns and yields look better than current ones. He grows his money at 5% a year and then draws a 4% income in retirement. By age 56, said worker would have enough to produce $15,000 in yearly income. If he waited until 62, he could collect $20,000. Post continues after video.

If that seems unfair, it gets worse:

  • First, the 401k saver is contributing mostly his funds, while the federal pension is paid mostly from taxpayer funds.
  • Second, after retirement he must think about things like the rising cost of living, whereas the federal plan adjusts automatically for the rising cost of living after retirement.
  • Third, any risk that the federal pension won't perform well enough to pay its obligations is borne by taxpayers, not federal workers.
  • Fourth, federal employees don't miss out on being able to contribute to 401k-style plans. They have one of those, too.

In addition to his pension, Weiner will collect from this additional plan, plus Social Security. He also has a blue chip stock portfolio that disclosure filings show was worth $226,000 in 2009 when the market had tanked, so it's probably worth about $300,000 now.

 

Add to that any retirement savings the congressman had from his six-year stint as a New York City councilman, plus whatever CNN inevitably pays him in the future to co-host next to Eliot Spitzer.

 

The point here isn't that politicians don't deserve decent retirement plans. The last thing America needs is financially insecure lawmakers. But Weiner is getting the equivalent of a $1.2 million exit payment after serving just 12 years on the job. Now that's worth tweeting about.

 

More at SmartMoney and MSN Money:

12Comments
Jun 17, 2011 5:13PM
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wonderful!  isn't it grand that SO many in the government system get paid SO well for doin SO little and then in retirement get guaranteed returns!  and we wonder WHY we're in financial trouble?  now, WHO do you suppose in power even has the motivation to FIX this gravy train? 
Jun 18, 2011 2:08PM
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By allowing our congress to write their own rules we tax payers get stuck again..It is time for congress to not have the authority to write their own tickets for anything..it is time for the voters to have their say..and hopefully get honesty back into our government system..otherwise..we get exactly what we are paying for....dishonesty covered by our law makers with their own protective rules.
Jun 17, 2011 8:47PM
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That is what happens when you make your own rules!
Jun 17, 2011 8:50PM
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Gee..Weiners a piker compared to former mayor of Baltimore  and convicted crook Shiela Dixon.  Remember..she is the one who stole $25 dollar gift cards designated for the poor of Baltimore City.  Now, she is eligible for a pension of $80,000 a year starting now.  Who says crime doesn't pay........  
Jun 17, 2011 6:51PM
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OH my Freakin' GOD~!

 

Talk about "entitlements"

Jun 17, 2011 6:24PM
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From Congress to Taxpayers:

 

We would love to discuss slavery with you but we are afraid you would not understand.

Jun 18, 2011 9:49PM
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Why is everyone worried about this $25,000 retirement ??

The real problem isn't Weiner's retirement but other costs to taxpayers such as the

House Speaker who was using a government jet to fly coast to coast every week to go home.

 

How about our so called president who lives on Air Force 1 and takes Air Force 2 and other

C 130 planes to talk to grade school children.  The plane is used for political speeches.

 

Get on some real money problems.

 

Jun 18, 2011 11:45PM
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I have always been of the opinion that NO one serving in elected office in the Federal government deserves any kind of pension for less than 20 years of service.  Maybe the new president and congress will reverse it in 2012-13. Doubtful, but I can hope.
Jun 17, 2011 7:10PM
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While I agree that Congress is over-compensated for the job they do/don't do, I'd be careful before I start lumping all federal employees into the same boat.  Remember FERS also covers federal Law Enforment Officers (e.g. FBI, ATF, Secret Service) and a great many of thsoe came into federal employ after spending careers in the Armed Forces.
Jun 20, 2011 5:21AM
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The real money will come Weiners way now that he has left Congress. Either he has a deal made as he exits or someone will come along to sweeten his pot  for bowing out and removing the thorn that was poking all of the other Dems. Both sides do it and it really sucks.
Jun 20, 2011 2:51PM
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Let us all remember that every public employee, from the President down to the lowest paid employee at the local municipality, receive every dime of income and benefits from taxes paid by business and private sector employees. They work for us and yet get more than any of us. That's like you getting paid more, and having better benefits, than your boss. It doesn't work in the business world, why should it work in the public sector.
Jun 19, 2011 10:35AM
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Will  the congressman continue getting health insurance from the government for the rest of his life starting now at age 46?  What about his dependants? I am not saying he should or should not receive these benefits I only am wondering how this works with Federal Government benefits. Anybody out there know how this works?

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