By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter: @BevIRAEdSlott
Prior to 1958, the U.S. did not provide a pension for its former presidents. George Washington retired to Mount Vernon where he resumed his role as a plantation owner/farmer. Abraham Lincoln did not live to collect a pension. His wife, Mary Todd Lincoln, petitioned Congress for a widow's pension in 1870, five years after Lincoln's death. She was awarded the sum of $3,000 a year.
The current law provides for a presidential pension amount equal to the pay of senior government officials. In 2012, this amount was $199,700 per year. The pension for the outgoing president begins at noon on Inauguration Day when the incoming president is sworn in. In President Obama's case, he will start collecting his pension in the year he turns age 56.
In addition to the pension, the outgoing president receives lifetime Secret Service protection, staff and office allowances – capped at $96,000 a year after 30 months, official travel expenses, and transition expenses. The former president is entitled to medical care in military hospitals, which he must pay for at “interagency” rates. If he/she wants private health insurance, that is at their own expense.
Not bad for a job that only lasts for eight years – if you get re-elected.
Contrast this with the declining number of companies offering pensions to new hires and companies that are buying out the existing pensions of retired employees. These are individuals who would have to work far longer than eight years to receive any benefit, and the benefit is vanishing. Many of today's employees find they have no company-provided pensions and instead, must fund their retirement with deferrals from their own salaries. If they are lucky, their employer will match at least part of their own contributions. And they are the lucky employees. Individuals who work for small businesses often have no retirement plan offered at work.
Is there a solution to the pension dilemma? I’d like to think so, but it will take work on the part of Congress and employers to come to a solution and I don’t expect it to happen very soon.