Seven Money Stumbles to Avoid and How to Change Course

Dec 28, 2012 No Comments by

YONKERS, N.Y. , Dec. 28, 2012 /PRNewswire-USNewswire/ – A widowed mother of two nearly lost out on $100,000 because her husband failed to update the beneficiary designations on his retirement plan after they married. Not updating wills and beneficiaries is one of the “7 money stumbles to avoid” featured in the February issue of Consumer Reports.

“Nobody’s perfect. Everyone makes money mistakes, and some might be unavoidable in times of financial distress,” said Tobie Stanger, Consumer Reports senior editor. “But missteps or miscalculations can cost you a lot over the long term or inadvertently hurt your family when you’re gone.”

Consumer Reports conducted a nationally representative survey about Americans’ money habits and uncovered several common and insidious blunders that could cause significant financial, and sometimes emotional, pain. The mistakes include:

•  Not updating wills and beneficiaries. Eighty-six percent of Americans hadn’t updated their wills or other estate-planning documents within the previous five years. But even if nothing has changed in your life, every year you should check your beneficiary designations in your will, insurance policies, investment accounts, and retirement plans to ensure your investment company, life insurer and employer still have the proper information.

•  Not sharing information with family. In only 30 percent of households did both spouses know major details about the family’s finances and where to find account information. Any easy solution is to designate a safe, file cabinet, or safe-deposit box to hold all important documents and account-access information.

  •  Messing up on 401(k)s. About two-fifths of respondents set aside 6 percent or less of  pretax income in defined-contribution retirement accounts, most likely missing out on free employer matches. Ninety-one percent never reviewed fund expenses within their plans, though those expenses play a major role in investors’ returns. Fortunately, it’s easer than in the past to compare funds’ expenses. As of last year, 401(k) plans are required to send statements to investors outlining marketing and fund management fees.

 

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