Weekend Reading: Top 5 Mistakes to Avoid in Retirement Account Planning

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading 5 retirement account planning mistakes to avoid Weekend reading 5 retirement account planning mistakes to avoid
Weekend Reading

When you pass away, the fate of your retirement accounts like a 401(k) or Roth IRA depends on the beneficiaries you designate. This is why matters of your estate hold a place in our Retire With Purpose planning framework; to provide you peace of mind that your assets will be distributed according to your wishes.


Further, five common mistakes an estate plan helps you avoid include:

📌 Not naming a beneficiary: If you don't specify a beneficiary, the court will decide how to distribute your assets, based on state law.

📌 Not removing an ex-spouse: After divorce, updating your beneficiary designation is important, as the listed beneficiary usually takes precedence over wills or divorce decrees.

📌 Failing to consider a beneficiary's death: If a beneficiary dies before you, how assets are distributed depends on how you designated beneficiaries, either "per capita" (among surviving beneficiaries) or "per stirpes" (to the deceased beneficiary's heirs).

📌 Assuming a will or trust suffices: Estate planning documents like wills or trusts may not govern retirement accounts unless they are designated as beneficiaries.

📌 Letting emotions hinder decisions: Emotional concerns about discussing death or fearing judgment can lead to inaction or poor decisions.

You have the power to provide your loved ones (and yourself) with increased comfort before your passing right now. Create a comprehensive estate plan that covers all angles of your assets and ensure your friends and family understand your wishes as well.