Why You Should Consolidate Your Holdings and Periodically Review Beneficiaries

By Britt Erica Tunick

Gone are the days when the first company someone works for is likely be the same company they are with at the time they retire. These days, the average person will have 10 different jobs before they are 40 years old according to the Bureau of Labor Statistics. Forrester Research predicts that number will only continue to climb, with the youngest people in the workforce expected to hold as many as 15 jobs in their lifetime.

Given this reality, most people will wind up with multiple IRAs, 401k plans, and possibly even shares of some of the companies they have worked for through employee stock purchase plans. While multiple accounts are fine, the best thing to do is to consolidate all of your investment vehicles to make it easier to track everything –and to potentially reduce the fees you may be paying each year for multiple accounts with the same kind of holdings, such as multiple mutual fund accounts.

Perhaps the most important reason to consolidate your holdings is because the beneficiaries you name on each account are the ones who will inherit those holdings at the time of your death – regardless of what it says in your will. That’s right. As important as it is to have a will that clearly outlines whom you want to inherit your estate, the beneficiaries named on each individual financial account, such as 401k plans, take precedence over what is stated in a will.

Because of this, you should periodically review all of your holdings to make sure that the beneficiaries you initially named are still the people you want to inherit.

Although parents or siblings are the obvious beneficiary choices for most people at the beginning of their career, things tend to change as life events occur – such as marriage, having children, or getting divorced. Because of this, make sure to revisit your retirement holdings and investments whenever a major event in your life occurs.