As we reach the midpoint of 2024, it’s prime time to evaluate how far we’ve come in achieving our goals. Are we making the progress we aimed for, or are we lagging behind? Perhaps some of us haven’t even begun yet!
At the start of the year, many of us embark with great enthusiasm on resolutions like saving more money, sticking to a budget, or rebooting our personal finances. But these objectives often demand ongoing attention and dedication.
That’s why we’re here to highlight a commonly neglected aspect of planning—one that you can tackle today and set aside for the rest of the year!
Understanding the Role of Beneficiary Designations
Have you gone through a life change? Have you been married or divorced? Have you lost a child or loved one? Many retirement account participants admit that they’ve never set up a beneficiary to their account, or if they have, they set it up years ago and have never updated it. If you’ve never set up your beneficiary designation, your account may have a contractual default, or it may go to your estate, forcing it through probate. Both situations may be time-intensive, expensive, and often don’t achieve your desired outcome.
If you haven’t updated your designations in years, you must check if updates are required. For instance, if you have been divorced, do you really want your retirement account to go to your ex-spouse? If you have been married, do you still wish your account to go to your siblings or your parents and not your spouse? Don’t forget to check the beneficiary designations on your group and personal life insurance policies!
Double-Check Your Wills
A simplified explanation of the purpose of your will is to catch all your possessions, including investments and insurance policies, that do not have beneficiaries listed and direct them to your desired heirs. Unfortunately, just like beneficiary designations, we tend to forget to update them as time goes by. It’s not uncommon for people to go a decade or more without reviewing their will. A lot can happen in a decade!
More importantly, if you require special considerations for your heirs, such as a special needs trust for a disabled child or family member or minor children who would require a guardian and/or a trustee for potential inheritances, your will is where you would (legally) list out your wishes.
Can you imagine being nineteen years old and inheriting $500,000? Would your children have the ability to make good decisions with this money?
A part of life planning is what happens with our resources and who we will leave behind. Don’t leave a mess, and don’t put those you love in dire situations. Each year, a few minutes can ensure that your wishes will be honored and that your loved ones will be cared for even if you are not here.
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