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may 2016


the foreign Service journal


Planning 101


On Life after the foreign service

John K. Naland’s 29-year Foreign Service career in-

cluded an assignment as director of the Office of Retire-

ment, as well as tours in Colombia, Mexico and Iraq.

He twice served as president of the American Foreign

Service Association and is currently president of the Foreign Service

Youth Foundation. This is an updated version of an article that first appeared in the September 2007 Foreign Service Journal .


ho in their late 20s to

early 50s, preoccupied

with the demands of

work, family and daily

life, has time to plan

for a retirement that is

many years away? The

answer is that we all

had better make time

for that if we want to be well-positioned to enjoy life after the

Foreign Service.

I know you’re all busy, so here is a quick guide for early- and

mid-career employees who realize that retirement planning is

important, but have not yet gotten started.

Show Me the Money

Many Foreign Service members have only a vague idea of

what makes up their retirement package. That, obviously, makes

it impossible to do even basic planning. So here is an overview.

Life after the Foreign Service begins with planning. Here’s how to get started.

By John K . Naland

This article focuses on those of us who joined after 1983 and

are thus enrolled in the “new” Foreign Service Pension System.

Employees who fall under the “old” Foreign Service Retirement

and Disability System should consult the Department of State

Office of Retirement website


) for infor-

mation on that plan.

Once FSPS participants qualify for retirement, here is what

we receive:


Our annuity is based on our “high three” average

salary and years of service. The salary is calculated by adding

average basic pay (determined by multiplying each salary by the

number of days that it was in effect) for our three highest-paid

consecutive years and then dividing by three. Basic pay includes

regular pay, domestic locality pay and overseas virtual locality

pay, but excludes allowances, differentials and overtime.

This “high three” salary is then multiplied by 1.7 percent

for each of the first 20 years of service, plus 1 percent for each

additional year. For example, an employee retiring with 25 years

of service and a “high three” salary of $100,000 would qualify for

an annual annuity of $39,000. That amount, however, provides

no benefits to a surviving spouse after the annuitant’s death.

Providing the maximum survivor benefits reduces the annuity by

10 percent to $35,100.

Social Security.

FSPS members pay into Social Security

throughout their careers and thus qualify for Social Security

benefits, which can begin as early as age 62 for those willing to take

reduced payments in return for a longer benefit period. However,