The Most Costly Mistake You Should NEVER Make

Quick question: When is the last time your financial professional sat down with you to review your beneficiary designations?  If it’s been ANY longer than 12 months, quite frankly, you should be concerned.  Why?  Because circumstances have a mysterious way of changing, and failing to maintain current, accurate beneficiary designations can be one of the most costly financial mistakes you could ever make.

One of the most poignant examples of this mistake comes from an article in the New York Post.  The story tells a twisted tail of Anne Friedman’s nearly million-dollar pension. Anne was a lifelong New York City school system employee.  In 1974, Anne named her mother, uncle and sister on her beneficiary form with the Teachers’ Retirement System.  A year later, Anne met and married Bruce Friedman to whom she was happily married for the next two decades.

During her entire marriage, Anne never updated her beneficiary designation.  At her death, Anne’s sister was the sole surviving beneficiary of Anne’s retirement plan and only her sister had the right to receive Anne’s pension money.  Anne’s sister exercised her right, took nearly a million dollars of Anne’s pension and left Bruce with

nothing.  Bruce sued, lost, appealed and lost again.1

CLICK HERE for a closer look at this “Pension Pickle.”

The moral of the story?  Keeping your beneficiary designations current – especially after a life-changing event such as marriage, divorce or the birth of a child – is absolutely critical. Here are just few additional examples of common situations that could create very undesirable outcomes.

Example #1
Roger & Leslie divorced after nearly 15 years of marriage. Both eventually remarried, but Roger failed to update his designations and replace Leslie with his new bride.  At his untimely passing, Leslie received over $400K from his IRA and roughly $300K in proceeds from a life insurance policy that still had her named as the sole beneficiary.

Example #2
Walter was a 62-year old doting grandfather. When he last reviewed his accounts nearly 8 years ago, he had two grandchildren.  He named these boys the beneficiaries of an IRA he’d always earmarked for his grandkids.  Walter’s daughter later had twin girls, but because he failed to ever review his designations, they were never updated, and the twins never received an equal share of his account as inheritance.

Example #3
Veronica and Jim had been married for over 25 years.  Childless, they had each designated each other as the sole beneficiaries of each other’s retirement accounts and small life insurance contracts.  Jim predeceased Veronica, but her designations were never updated, and at her passing, over $800K became part of her taxable estate rather than passing on to a secondary beneficiary.

Each of these is an outcome that could’ve easily been avoided with a simple, annual review of the individuals’ beneficiary designations, and if you haven’t sat down to review yours in the last year, the time is now. To schedule a complimentary Beneficiary Designation Review, simply call us at (704) 553-0123 or visit us at today!

These are hypothetical examples and are for informational purposes only.

1 “Pension Pickle.” New York Post. January 31, 2005.



The Value of Guaranteed Retirement Income

Whether you’re a Republican, Democrat, or non-affiliated, it’s always interesting when the President of the United States weighs in, endorsing a particular financial product or strategy. Most Presidents, and many politicians in general, steer a country mile clear of such backing, but in his most recent State of the Union address, President Obama made a bold statement in support of one of the most effective financial solutions for generating retirement income – the traditional annuity.


“To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.”

CLICK HERE to view the full-length State of the Union video (the President’s quote can be seen at the 46-minute mark).

The Obama administration will also be promoting the use of annuities to generate retirement income in upcoming proposals for helping stressed middle-income families. The administration’s plans include a proposal to encourage the use of annuities and similar products to transform savings into guaranteed future income, thereby reducing the chance of retirees’ outliving their savings or seeing nest eggs worn down by inflation or investment losses. These proposals were outlined in a fact sheet released by the White House just prior to President Obama’s State of the Union address.


The American Council of Life Insurers, Washington, has released a statement praising the administration’s plans and saying it is looking forward to working with President Obama and his administration on advancing the retirement security proposals.


“President Obama’s initiative recognizes a key challenge to Americans’ retirement security—
how to manage savings to last a lifetime,” ACLI President Frank Keating says in the statement. “The decline of defined benefit plans and emergence of defined contribution plans, such as 401(K)s, has shifted responsibility for managing savings from the employer to the individual.”

So why exactly is the President of the United States so fond of annuities for retirees? Because he knows annuities are a product that can guarantee them a consistent retirement income.* With the future of Social Security more uncertain than ever before and guaranteed pensions and defined benefit plans becoming virtually obsolete, the reassurance offered by traditional annuities has become increasingly attractive. Now, please note: The fact that annuities offer guarantees does not make them the proverbial “silver bullet” for every individual’s situation. Beware of anyone telling you that any financial product is the “magic pill” for whatever ails you. However, the guaranteed income generated by fixed and fixed index annuities does make them a very suitable component for those who share one of the most common concerns of today’s retirees – the possibility of outliving their money.

So what’s the likelihood you’ll outlive your assets? Why spend another minute wondering? Retirement is supposed to be the culmination of all you’ve worked so hard for – not some doomsday you’ve fretted about all these years. Let us help ensure you’re on path to the retirement of your dreams!

CLICK HERE to see how OUR state ranks in the Retirement Vulnerability Index!
CLICK HERE for the NY Times article: “The Unloved Annuity Gets a Hug From Obama”

*Guarantees subject to the financial strength and claims paying ability of the issuing company.
1ACLI Lauds Administration For Plans To Help Americans Secure Their Retirements. February 2010.