Do You Know About the Former Presidents Act of 1958?

Dear Rich Lifer,

Yesterday I found myself thinking about good ol’ George Washington … as well as Jefferson, Lincoln, and everyone else on up the chain.

I also found myself thinking about how much things have changed throughout the years.

When George Washington left office, he returned to his plantation until he died two years and nine months later.

And when Harry Truman first left the White House, all he got was a small pension from the Army.

Indeed, up until 1958, there were no retirement benefits bestowed on U.S. presidents at all.

Then came the “Former Presidents Act,” which gives guys like George Bush and Barack Obama a heck of a lot … after anywhere from four to eight years on the job.

For starters, they receive a generous pension that kicks in immediately and no matter what their age. (Obama, for example, is just 56 right now.)

The specific amount is equal to the pay received by the head of an executive department, such as a Cabinet secretary.

This year, the figure is $210,700. And it will probably continue rising every year because Cabinet secretaries have generally seen their salaries keep pace with changes in the Consumer Price Index.

It’s kind of ironic, actually.

At one point during his presidency, Obama said he wanted to cap the total value of regular Americans’ tax-advantaged retirement accounts once they had the potential to produce more than $205,000 a year in income.

Yet his own presidential pension was worth more than that amount in just his first year out of the White House.

And that’s still just the beginning of all the benefits.

First: Transition Expenses

For a president’s first seven months after leaving office, there are “transition expenses”. This extra money covers office space, staff compensation, phone bills, postage, and other costs of the transition.

How much are we talking here?

Well, during his fiscal 1993 transition, George Bush used $907,939!

And that number seems in line with the amounts used by other presidents, too.

Second: Additional Staff and Office Allowances for Life.

Six months after a president leaves office, they start getting additional funds for a staff — a maximum of $375,000 for the first 30 months and then $96,000 a year thereafter.

If Obama lives to 86, that would be almost another $3 million in extra bennies!

And former presidents can also continue getting reimbursed for their offices, supplies, phone bills, and other items.

In 2009, for example, Bill Clinton’s office in Harlem cost taxpayers $516,000.

Third, Lifetime Protection from the Secret Service.

This was a benefit from 1965 through 1996. And although it became limited to 10 years for presidents inaugurated in 1997, President Obama signed legislation that reinstated lifetime protection for himself, George W. Bush, and all future presidents.

It’s worth noting that Richard Nixon gave up his protection in 1985. So far, he’s the only former president to have ever done that.

It’s also worth noting that although “protection costs for former presidents are not publicly disclosed by the Secret Service for reasons of security,” one estimate from The Daily Mail pegged the value at $20 million a year!

Fourth, Medical Coverage.

All former presidents, along with their wives and children, can get medical treatment at military hospitals at rates that are set by the Office of Management and Budget.

In addition, two-term presidents can get health insurance under the Federal Employees Health Benefits program.

And yes, all former presidents can also have a library established in their names and managed by the National Archives and Records Administration.

Now, look, I think being POTUS is an outrageously stressful, absolutely monumental job.

And the position’s current $400,000-a-year base salary is less than some middle managers make at Fortune 500 companies!

So in no way am I saying a President of the United States doesn’t deserve some kind of retirement package once their service is over.

But some of the other stuff is pretty ridiculous — all the extra millions in offices, expenses, staff allowances, security details, and more.

Heck, even though President George W. Bush loved to talk about government waste, he had no problem using his retirement expense account to rack up more than $80,000 just in annual phone bills.

Which brings me to… 

Why Should You Care?

First, because it’s our money that pays for these things.

And second, because it further demonstrates the problem with having people create laws that will never affect them in any meaningful way.

We’ve gone from the olden days to the golden days in Washington: Lavishing millions of dollars in yearly perks on our politicians even as they leverage their celebrity to build personal fortunes by writing books, making speeches, and serving as corporate advisers.

Congress actually passed a law in 2016 that looked to address this situation.

It set the presidential pension at $200,000 a year and capped additional expenses at another $200,000 a year.

Future increases to these amounts would have risen at the same rate as Social Security’s COLAs.

Plus, the benefits would have disappeared dollar for dollar with amounts earned by a president above and beyond the $400,000 mark.

In other words, once a president earned $800,000, taxpayers wouldn’t be paying anything in pension or other benefits.

Too bad Obama vetoed it.

Oh well, Happy (belated) President’s Day!

To a richer life,

Nilus Mattive

Nilus Mattive

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Nilus Mattive

Nilus is the editor for the daily e-letter The Rich Life Roadmap and a Paradigm Press analyst.

Nilus began his professional career at Jono Steinberg’s Individual Investor Group, where he published his original research through a regular investment column. Later, he worked for a private equity business and spent five years editing Standard and Poor’s...

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