paul ryan

House Speaker Paul Ryan's decision to retire in January not only has a big political effect, but also will make a big difference for his pension.

  • House Speaker Paul Ryan announced Wednesday that he will retire at the end of his current term.
  • By retiring in January, Ryan will have served 20 years in the House and three years as Speaker.
  • Ryan would receive significantly more from his pension by waiting to hit these totals.

In addition to preserving consistency in GOP leadership through the midterm elections, House Speaker Paul Ryan's decision to wait until the end of the term in January to retire could have a significant effect on his retirement benefits.

Members of Congress elected after 1984 are enrolled in the Federal Employees' Retirement System, or FERS. For members, the FERS plan includes a basic monthly annuity, or pension — it's based on years of service and salary as a member.

House members elected before 2003 do have the option to decline the FERS enrollment, so it is possible Ryan could have turned down these benefits. A spokesperson for Ryan did not immediately return a request for comment.

Ryan would be able to draw his pension at age 50, since his time in Congress and time as a staffer would combine to be roughly 24 years of federal service.

If Ryan did enroll in FERS, the timing of his retirement could have a significant effect on his benefits since a January retirement means Ryan will have served for just over three years as speaker. Ryan took over for John Boehner on October 29, 2015. The annual payment to a retired member is determined in part by calculating the three highest-paying consecutive years of a member's career.

In Ryan's case, retiring after October means he would have a three-year stretch earning the speaker's salary of $223,500. If Ryan failed to hit those three years by retiring immediately, his average would be reduced since he would have served less than three years at the speaker's salary and some of the high-3 at the normal member's salary of $174,000.

Based on the FERS payments formula from the Congressional Research Service, Ryan would receive an annual pension payment of $84,930 if the speaker remains on the job until January.

If Ryan were to retire early, the speaker would only receive less than that since one year of non-speaker's pay would be factored in.

Of course, Ryan could also have other retirement savings from time in the private sector or the congressional Thrift Savings Plan, which functions like a 401(k).