Retirement Plan Update, Q4 2021

Market Recap:

The S&P 500 gained nearly 11% in the 4th quarter.  That’s a strong quarter in any circumstance, but even more impressive given the challenges faced.  The highly transmittable Omicron variant led to a significant increase in volatility at the end of November; however, the U.S. market quickly recovered as data revealed the lower severity of the disease.  The variant’s high level of transmissibility, and its potential to demand more aggressive restrictions, is having a larger impact on global markets.

On the economic news front, the Federal Reserve reported they will accelerate their schedule for both the tapering of asset purchases and raising interest rates due to persistent inflation.  The annual inflation rate, as measured by the Consumer Price Index, rose 7% year-over-year, a level not seen since 1982.  There is now a high probability of three rate hikes in 2022, potentially starting as soon as March.  That will create a challenging fixed income environment, but corporate bonds, particularly high yield, should be supported as long as corporate earnings remain strong.

BENEFICIARIES:  Who will get your money when you die?

When is the last time you reviewed the beneficiaries on your retirement plan account?  As we’ve said before, it’s very important to keep that up to date to reflect how you want your money to be distributed if something happens to you.  Your beneficiary is a person or entity, designated by you for your retirement plan, to receive benefits from the plan in the event of your death. 

When you have major life-changing events it’s important to update your beneficiary designations. Keep in mind that your beneficiary designation on retirement accounts supersedes a will. If you get married or your spouse dies, or you have a new child or grandchild and update your will, your retirement account beneficiary may be out of date.  One example is if you get divorced and remarry, but do not update your beneficiaries, your former spouse is the legal heir to those accounts if you named him/her the beneficiary while you were married. If your heirs decide to fight the beneficiary designation in court, litigation can be expensive and take months.

Take a moment now, as the new year begins, to make sure all your retirement accounts and life insurance policies have beneficiaries that reflect what you want to happen.