5 On Your Side

Updating your pension could save your family

Posted January 31, 2013 6:01 p.m. EST
Updated January 31, 2013 6:25 p.m. EST

Bad things can quickly get worse if you've overlooked some of the most basic financial precautions -- and surprisingly, a lot of people are in this position.

A simple jog changed Karen Mendelsohn’s life forever. Her husband went for a run and never came back.

“He suffered a sudden heart attack. It was horrible,” Karen said. “And they couldn’t revive him.”

She and Harold were married for 10 years and had two young children.

Her husband never updated his pension and never named her or their children as the beneficiaries. It was still in the name of his parents.

When Karen asked his parents about it, “They said ‘No.’”

“They said, ‘If our son left us as the beneficiaries, he wanted us to have the money.’” Karen said.

Consumer Reports says financial oversights like Harold Mendelsohn's are way too common.

"Our survey found that in the last five years, 86 percent of respondents had not checked or updated important estate documents, including wills and beneficiary designations,” Tobie Stanger of Consumer Reports said.

Financial planner Gayle Lob says another frequent mistake couples make is having only one person in charge of the finances.

"What if somebody gets disabled?” Lob said. “What if one of them dies?”

In a survey, Consumer Reports found that, with 70 percent of couples, only one spouse knew key details about their accounts.

"And, if you are over 60 and have adult children, it's time to let them know where that important information is as well,” Stanger said.

It is also important to think about whether or not you have enough insurance coverage. Half of homeowners didn't -- at least not enough to replace items at today's prices.

More than 70 percent didn't have enough money put aside to survive three months if they lost a job or got sick, Consumer Reports said.

"You may not solve everything all at once, but just taking those first simple steps may save you and your family a lot of heartache down the road,” said Stanger.

As for Karen Mendelsohn, she had to sue her in-laws to get her husband's death benefits.
She hopes sharing her story will encourage others to take care of anything that needs updating.

Along with regularly updating estate planning documents, Consumer Reports recommends designating a file cabinet or safety deposit box for your will, insurance policies and a list of all important accounts and investments.