Thompson shies away from stocks

By Tim Middleton

With his campaign now in full, if belated, swing, Fred Thompson has shown himself to be both a man of the people and a man of privilege. At least as far as his retirement savings are concerned.

The populist piece: Thompson doesn't have any of his savings invested for retirement. In fact, despite his relative wealth, Thompson doesn't appear to own any stocks, a surprise given the Republican Party's pro-business, pro-Wall Street leanings.

And the privilege: Thompson is one of the dwindling number of Americans who has a defined-benefit pension.

Thompson's financial disclosure to the Federal Election Commission reports three pensions, including one from the U.S. Senate. He served only a single term, but last year his federal pension paid him as much as $50,000.

That benefit stands in stark contrast to the plight of the typical American worker, whose 401(k) has a balance of $66,650, according to the Investment Company Institute. Assuming withdrawals of 5% annually, that would provide retirement income of roughly $3,300 a year.

Plenty of income

Thompson's assets -- none of them tied, 401(k)-style, to volatile financial markets -- totaled between $3.2 million and $9.6 million. They consisted of bank accounts and one rental property in Washington, D.C. Last year, he earned between $2.7 million and $15.5 million, according to the filing, which reports income and assets in broad ranges rather than specific amounts.

All of the other major presidential candidates have significant investments in stocks, bonds and mutual funds, in many instances tied to their 401(k) plans.

Why no stocks in Thompson's portfolio? Is he skeptical of the stock market? Too careful with his money? Thompson's campaign declined to comment. But although he has no evident experience as a shareholder, he has plenty of experience representing management.

Thompson spent decades as a lobbyist, including work for Westinghouse on a failed bid in the 1980s to get massive subsidies for a nuclear reactor, which one conservative think tank labeled a "multibillion-dollar folly."

He also served as a director of the Nasdaq stock exchange and of Stone & Webster, an engineering firm that went bust six years after Thompson left the board.

The job he's after pays $400,000, but it would kick up his federal pension benefits considerably. They are based on length of service and go as high as 80% of pay for the three highest-paid years. Senators earn far less than the chief executive -- some $165,200 last year.

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Thompson doesn't have to worry about where his next meal is coming from. His AmSouth Bank account in Nashville of between $1 million and $5 million produced income last year of as much as $100,000. The star of television's "Law & Order" also garnered millions from his acting jobs and a stint with ABC Radio, where he replaced the legendary newsman Paul Harvey.

Thompson also reported as much as $4 million in income from the Washington Speakers Bureau, the British think tank Policy Exchange and two investment firms where, according to the filing, he earned a salary but participated in no investments. He was on the board of Guggenheim Management and a consultant to London-based Equitas, a spinoff group created in the 1990s to save Lloyd's of London from piles of insurance claims.

The only investment reported in the disclosure was the rental property, a condominium that he took back for his personal use in 2006. It had a mortgage of between $100,001 and $250,000.

Thompson's future is secured by three pensions: one he owns privately, one as a member of the Screen Actors Guild and the third as a former senator.

A better plan

Thompson's fortune sets the retirement problems of the rest of America in sharp relief. Only about 20 million Americans in the private sector have pensions. Fifty-five million have 401(k)s, according to the Profit Sharing/401k Council of America. And an uncounted multitude of people who work for small businesses have no retirement plan at all.

Unless you work for the Fortune 500, your 401(k) is probably terribly flawed. The choices are poor, the costs are high and the company doesn't want to talk about it.

Next week I'll give you some alternatives. These include conventional and non-deductible IRAs, as well as opting out of 403(b)s, the public-sector plans that are vastly worse than 401(k)s.

Your options also include company reforms -- such as putting yourself on the investment committee -- because you do have leverage. With enough support from your fellow employees, you can bring in the Department of Labor. Plans might be voluntary, but compliance with federal rules is not. I'll tell you which buttons to push and show you where the buttons are.

You may never be the Manhattan district attorney or play one on TV, but you have something Fred Thompson doesn't have -- a 401(k). Managed properly, it can give you a richer income in retirement than a U.S. senator gets. At least from his public service.

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