Members of Congress Enjoy Cushy Retirement Options

July 22, 2013 — -- As Americans struggle to piece together a comfortable retirement, members of Congress who have helped create many of the laws that shape such planning enjoy a nicer retirement than the average American, according to a new Bankrate.com analysis.

Chris Kahn, Bankrate's research and statistics editor, said the website receives a lot of questions from readers about retirement benefits, and Bankrate staff wanted to know how those benefits compared with those of elected officials.

Though fewer than one in five private sector workers qualify for a pension, according to the U.S. Bureau of Labor Statistics -- down from more than four in five in the early 1980s -- members of Congress all qualify for federal pension programs that pay from $40,000 and up per year.

"Members of Congress and other federal workers pay very little for their retirement investments," Kahn said.

For example, members of Congress have access to the federal Thrift Savings Plan. The federal government matches contributions up to 5 percent, in addition to a 1 percent giveaway whether or not the employee contributes. The expense ratio of the TSP in 2012 was just 0.03 percent, an improvement from the expense ratios paid by 401(k) investors for equity funds. That's 0.63 percent, according to the Investment Company Institute. The average private sector employer match is just 4.1 percent. The TSP is on top of pensions congresspeople get.

Members of Congress can get health coverage through the Federal Employees Health Benefits Program in which the government pays between 72 to 75 percent of the premium cost.

A member of Congress retiring with 20 years of service under Federal Employees' Retirement System and a high three-year average salary of $174,000 would get an initial annual FERS pension of $59,160.

A member of Congress retiring with five years' service under the Civil Service Retirement System and 25 years under FERS at the same salary level would get an initial annual pension of $89,610.

READ BANKRATE'S STORY ON CONGRESSIONAL PENSIONS

A member of Congress retiring with 30 years of service under the CSRS offset plan would get $130,500 year, though at age 62 or older, this amount would be reduced by the amount received from Social Security attributable to federal service.

Kahn said the biggest takeaway for consumers is that the federal government has long been considered a source of excellent jobs with great benefits.

"That's still the case today," he said. "And Congressmen, who earn six-figure salaries, tend to generate bigger retirement benefits than other federal workers. If you want to retire like your Congressman, you may need to work a little harder and save a little more."