Retirement Readiness – Do a Bennie Check-Up

August 11, 2010

A workshop participant had a huge grin on her face at one of our Retirement Readiness workshops when she announced to the group, “My ex-husband passed away and had me down as the beneficiary on his IRA and I have to say that I don’t think he really meant to.  I also didn’t turn the money down but I am sure it was not meant for me!” The crowd broke into a combination of smiles, chuckles and outright laughter – the severity of their reaction probably having more to do with their own life experience than anything else.

There are many worse stories that I have personally witnessed including a single woman in her 50’s leaving her mother as the beneficiary for her pension instead of her two adult children in their 20’s –her elderly mother being in a nursing home on Medi-Cal (in California).  I’ve also seen an instance where a widow brought in savings bonds to be cashed in and were issued to her deceased husband (jointly owned with his deceased mother). Can you imagine the paperwork this woman had to do?  It was challenging to say the least.

I know you are probably thinking, “Yes sad story but my paperwork is in order.” Well, take a minute and think of all the types of accounts that you can pass to a loved one directly through naming a beneficiary.  There are the obvious ones: life insurance policies, IRAs and your 401(k); just take a few minutes to make sure you have the correct beneficiary on these accounts.  If it doesn’t show it on your statements, contact your provider and inquire because seriously, what if you are wrong?  Is it worth it?

Other accounts where you can add a beneficiary are certain bank accounts like savings accounts, certificates of deposit and money market.  These accounts along with brokerage accounts allow a “transfer of death” or TOD.  You simply fill out a form and add a beneficiary.  Brokerage accounts also have the ability to add a TOD to the account so if you don’t have that set up, get it set up.

Generally we aren’t going to come home from work on any given weeknight and think, “Well, I think I’ll just check my beneficiaries tonight!”  But thinking about our grinning workshop participant, maybe this week is actually a good week to do a check-up. Just in case.

So take the challenge and this week, do a bennie check.

I’ll do it too!