Life is not a Dress Rehearsal
Eileen St. Pierre, The Everyday Financial Planner
In a span of 5 days, two members of my high school graduating class passed away. Our motto was “Wild, Crazy, and Alive – We’re the Class of ’85!” Both were great guys, but battled tough illnesses – cancer and ALS. It’s hard not to think about your own mortality. These events also reinforce my desire to live each day to the fullest.
In tribute to my friends, I wanted to offer some simple tips we all can use to get our affairs in order, regardless of our age.
Keep Your Financial Lives Simple
While it’s important to diversify and invest your money into different asset classes (like bonds, stocks, real estate), it is not necessary to open accounts with many different financial institutions. Choose one or two financial institutions you trust who offer all the services you will need.
I know people who have a lot of different retirement accounts with multiple companies because of all their jobs. They run the risk of forgetting about some of them. This could result in penalties imposed by the IRS for failure to make Required Minimum Distributions starting at age 70 ½.
- Rollover these accounts into a single Traditional or Roth IRA.
- Make sure the financial institution establishing the rollover IRA does all the paperwork to avoid early withdrawal penalties.
Keep Your Beneficiaries Up-to-Date
Whenever you experience any changes in your life such as marriage, divorce, birth of a child/grandchild, or death of a loved one, update the beneficiaries on all your financial accounts. Remember, these accounts represent contractual agreements between you and the financial institution. A will does not override a beneficiary designation.
Keep Your Financial Records in Order
If your family cannot access your financial accounts, they may not be able to get the money they need to settle your estate. Make a list of all your accounts with their access information including usernames and passwords. Put this list in a safe deposit box or other secure place.
- A friend of mine lost her son in the line of duty during the Iraq war. After months of trying different passwords, she was finally able to access his accounts.
- My Let’s Get Organized column offers tips on how to get your records in order.
- My You’re never too young to begin estate planning column explains the basic components of an estate plan.
Consider Life Insurance
“How will my family manage financially when I die?” is a question that few of us really want to think about. If someone depends on your income, it’s a question that you cannot avoid. Life insurance is a simple solution to this difficult question. Read my Life Insurance Fact Sheet for more details.
This column is dedicated to Chris Bottiglieri and Angelo Caparelli. I received a beer cozie from Chris’s brother with the saying “Life is not a dress rehearsal. Play harder.” These are words to live by.