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Democratic presidential candidate U.S. Senator Bernie Sanders, (I-VT) speaks during a news conference December 23, 2015 in Chicago. Joshua Lott—Getty Images

Bernie Sanders Is a De Facto Millionaire

This is part of a series of articles looking at the presidential candidates’ own finances. Previous articles examined Jeb Bush’s portfolio and Ted Cruz's investing strategy.

Democratic presidential hopeful and U.S. Sen. Bernie Sanders rails against the "billionaire class," has called income inequality "the greatest moral issue of our time," and has made a big point of contrasting his earnings against his peers in this election.

While the senator is indeed far less wealthy than many of his Senate colleagues -- as well as his fellow presidential contenders -- he is not exactly a man of modest means.

True, on the financial disclosure forms Sanders released after announcing his entrance into the presidential race, he lists no assets of his own, other than a $5,000 annual pension payment from his stint as mayor of Burlington, Vt. All of the investments itemized on the disclosure form belong to his wife, Jane, who worked as an educator and college administrator.

But that form does not require Sanders to disclose the amount of savings or the kinds of investments he holds in his government retirement savings account, known as the Thrift Savings Plan -- the well-regarded retirement plan, similar in many ways, to a private-sector 401(k), that GOP hopeful Marco Rubio actually proposes opening up to other Americans. The form also doesn't include the large pension that Sanders will receive when he retires from Congress.

Sanders' campaign did not reply to repeated emails from MONEY about his finances and his retirement account.

$1 Million-Plus Nest Egg

Although Sanders and his wife's joint tax return showed income of only a little more than $200,000 for 2014 -- including his $174,000 salary, his mayoral pension, and their Social Security payments -- the senator's expected retirement benefits make his situation much more comparable to those in the millionaire class he faults.

If Sanders, now 74, retires from politics at the end of his current Senate term two years from now, without having won the presidential election, he will be able to collect an annual pension of $71,340, MONEY calculated using the current Congressional pension formula.

For another 74-year-old man to buy a guaranteed income stream (or annuity) that would pay out the same inflation-adjusted benefit starting at age 76, it would cost "about $1 million," according to a calculation that David Blanchett, head of retirement research at Morningstar Investment Management, ran for MONEY.

Sanders has also probably accumulated a tidy sum in his Thrift Savings Plan. A Washington Post analysis of Sanders' 2014 tax form found that he had some deductible contributions to his retirement plan as well as health care costs, although it's unclear exactly how much he's been contributing.

A back-of-the-envelope calculation suggests that even if Sanders has been contributing just 3% of his salary per year for his entire time in both the House and the Senate -- and has earned a modest 5% annualized rate of return -- he'd have accumulated almost half a million dollars by the end of 2015, thanks in part to the government's matching contributions. If he has been contributing a steady 5%, he's probably got more than $700,000. That's in addition to his wife's retirement funds (more on those in a minute) and his pension.

Indeed, when you factor in his mayoral pension, any Thrift Savings Plan assets, and Jane Sanders' retirement funds, the household's effective retirement nest egg could be closer to a $2 million valuation. That's well above the American average, of course. About half of households 55 and older have no retirement savings, according to a GAO report released last summer. And of those who do, households age 65-74 had a median $148,000 saved.

Even Sanders' annual pension alone would be far above the $36,895 that the median American household with at least one member over 65 earns in a year, according to the Pension Rights Center.

Advice for Pension Holders

Although it's unclear what types of assets Sanders actually holds in his retirement account, advisers say anyone with a large pension should factor it in when formulating their investing strategy. Investors who can count on both pension income and Social Security can be even more aggressive with their retirement investments, they explain.

"Often times, I see clients who have large pensions become too conservative with their investment portfolio," says Reston, Va., financial planner Mark Atherton. "A large guaranteed pension is like having a big bond investment in your portfolio. ... To then have your actual portfolio invested conservatively -- say, heavily in bonds -- gives you no growth engine to keep pace with inflation."

Atherton also advises couples with pensions to delay taking Social Security until age 70, as most of these couples don't actually need the funds right away and their Social Security amount will increase 8% each year they wait.

Annuity Holdings

There's another area where the Sanders family could probably boost its retirement income: Jane Sanders' retirement account.

Jane Sanders holds assets in a couple of different annuities -- likely invested through a 403(b) plan, thanks to her career in academia -- and those assets, unfortunately, often come with high expenses and more limited choices.

Sanders could make her investment dollars stretch a lot further if, for instance, she took the amount she has invested in a VALIC annuity -- valued at roughly between $75,000 and $427,000 --and rolled it over into an IRA managed by a low-fee company like Vanguard, says Murrieta, Calif., financial planner Scott Dauenhauer.

Her VALIC account's average fund expense fee is 1.56%, says Dauenhauer -- who also says that because the account holds 20 different investments, it is probably also actively managed, which would raise her annual fees to more than 2%.

That's a lot to pay in fees. Especially when some of the index funds she holds through VALIC could be held outside the annuity for far less. "With some Vanguard funds, she is paying 27 times the price to [hold them inside] a VALIC product," says Dauenhauer.

Since she has left the academic world and is not now contributing to a 403(b), he says, she could probably make the move without having to pay "surrender charges" -- penalties for terminating a policy or withdrawing funds from the accrued value before a set time.

But because it is unclear what that time frame is for Jane Sanders' annuities, Dauenhauer recommends that she -- or anyone in a similar situation -- research the plan's exact rules and restrictions before making any moves.

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