The Foreign Service Journal, July-August 2013

THE FOREIGN SERVICE JOURNAL | JULY-AUGUST 2013 21 AFSA Scholarship AFSA.org/Scholar AKA StayAKA.com Clements Worldwide clements.com Diplomatic Automobile www.diplosales.com Embassy Risk Management Embassyrisk.com The Hirshorn Company hirshorn.com/afsa McGrath McGrathRealEstate.com ProMax promaxrealtors.com Tetratech Tetratech.com WJD wjdpm.com can dramatically underperform bond funds. For example, in 2008 the TSP’s C fund fell 36.99 percent, while the TSP’s G fund grew 3.75 percent. However, over long periods of time, stock funds outperform bond funds. For example, between 2003 and 2012, the G fund had an average annual return of 3.61 percent, while the C fund had an aver- age annual return of 7.12 percent. Thus, in selecting a TSP portfolio, employees must decide how much risk they are willing to take. A key consideration is your time horizon. If you will not start withdraw- ing from your TSP account for many years, or you hope to remain invested in the TSP for several decades after retirement, then you may want to take more risk now in your TSP account to increase the likelihood of generat- ing gains over a period of decades that outpace inflation. Unclear about Post-Retirement Life Insurance Needs: Twenty-one percent of respondents had little or no under- standing of how much life insurance they would need after retirement. Life insurance needs during and after employment depend on how much money you wish to leave for your survi- vors (for example, to pay off a mortgage or pay for children’s education). Basic coverage under the Federal Employ- ees Group Life Insurance program The only way to reduce the tax bite on pension and Social Security income is to reduce income from other sources in order to drop to a lower tax bracket. is automatic unless you decline it or elect additional optional coverage with higher premiums. To carry any level of FEGLI insurance into retirement, you must have had that same or higher coverage during your last five years of employment. Most employees carry basic FEGLI coverage (which pays approximately one year’s base salary) into retirement. That cover- age is automatically reduced after age 65 (unless you pay a higher premium to avoid that) until it reaches 25 or 50 percent of its starting level (depending on the option you pay for). Many private insurance companies offer their own plans. To Learn More More information on these topics is available at a variety of locations. HR/ RET’s Internet site, The Retirement Network (RNet) at ww.RNet.state.gov, offers a wealth of information, including a searchable database of 340 Frequently Asked Questions on Foreign Service retirement issues. HR/RET’s homepage on the Depart- ment of State’s intranet contains detailed retirement planning informa- tion, including copies of HR/RET-issued telegrams. And FSI’s Career Transition Center conducts a four-day Retirement Planning Seminar (RV101) with in- depth briefings on retirement topics. n