Updating Retirement Account Beneficiaries

We all know the importance of saving for retirement, whether we are decades from retirement or currently enjoying the rewards of a lifetime of diligently putting money aside for retirement.   For many of us we focus most of our attention on ensuring that we have the right asset allocation for our retirement accounts, or maximizing the contribution amounts so that we can reach our retirement goals and/or lessen our tax burden.  But one often-neglected task could easily unravel the best-intended retirement plans:  improper beneficiary designations.

Improper beneficiary designations could prove to be a financial hardship for your loved ones if you were to suffer a sudden death, and the assets you intended to be used for their well-being could end up elsewhere.

While it is not very difficult to update beneficiaries, we seldom think about reviewing our designations on a regular basis.  Think about how busy we all get in our day-to-day lives.  It is not unusual for many Americans to change jobs every couple of years.  People get married, people get divorced.  People become new parents, oftentimes more than once.  And unfortunately, people survive the deaths of their own children or spouse.   When any of these situations occur, there is the potential that your retirement account beneficiaries are no longer set up the way you intend them to be moving forward.

What can you do to ensure your loved ones are taken care of?

There are a couple of simple steps you can take to ensure that your assets are passed along to your loved ones or charitable interests.

  1. Review your beneficiary designations on all of your retirement accounts, life insurance policies, pensions and/or annuities to ensure they still reflect your wishes. During our client review meetings, we routinely check for changes in our clients’ lives to ensure that their beneficiary designations reflect their current wishes.
  1. Consolidating your retirement accounts can provide multiple benefits. In addition to making it easier to keep your beneficiary designations current, consolidating your retirement accounts ensures that your overall portfolio allocation is consistent and may save you from costly retirement plans with hidden fees.
  1. Choosing and changing beneficiaries for your retirement account is very easily accomplished. Ensuring that your non-retirement assets are passed according to your wishes is another matter and often involves the services of an estate-planning attorney.  It is important to revisit your estate plan with your attorney every few years to ensure that your plan reflects any changes in your situation, as well as the latest laws.  If you are not currently working with anyone, Bollin Wealth Management will gladly recommend an estate-planning attorney that we have vetted.

Finally, keep copies of all your estate planning documents and beneficiary designations in a safe place where family members can easily access them.


Sources: Financial Planning Association, DST Systems Inc.