Keeping the “bag lady” specter at bay
I’ve never heard this discussed by men, but some women carry the worry that they will end up old and alone, with no money and no home. It’s not generally ever-present, but rears up as reports on foreclosures, unemployment, plant closings, and law-firm and hospital layoffs proliferate in the press. It’s often termed “bag-lady syndrome”.
Ever hear of it? You’ll see a reference to it every year or so. It’s a fear that the financial rug will be pulled out from under you suddenly, leaving you with limited—if any—resources. I have certainly heard at least half-joking references to this in the last two years by women who have been saving diligently for retirement.
Why should this worry lurk for women? It’s not hard to understand.
While the margin may be dropping, women still live longer than men. At age 65, they are expected to live another 19.7 years on average, versus 17 years for men. Analysis by Vanguard’s Center for Retirement Research, headed by my fellow blogger Steve Utkus, of 3 million participants in retirement plans serviced at Vanguard indicates that men have average and median balances that are about two-thirds higher than those of women. There may be any number of reasons for the gap, including age and time in the workforce, but this is a significant difference. Things may be changing, however: That same research shows that women are saving slightly more than men at the same income levels.
I’m not sure a little worry is such a bad thing, because it can spur action. But how can you keep the bag-lady specter at bay?
When it comes to your financial health, make sure you have a good plan that you put together yourself or with the help of an advisor. Understand your objectives, and make sure your savings and investment strategies relate directly to those objectives.
It’s important to clearly understand your current financial picture and to get a realistic assessment of the assets you’ll need to accumulate to support yourself in retirement. Then put the plan into action and start saving, making sure that your investment strategy reflects your own risk tolerances—not someone else’s. Taking on too much risk to try to make up for that last recession or for a lack of savings can backfire tragically, so be sure you are comfortable with your direction.
While such a plan won’t stop the “aging” part, it certainly can help make the next stage of life more comfortable. And don’t forget to develop friends and activities to help deal with the “alone” part! As time goes on, try layering on some additional activities that will help keep you in control. That includes getting information about options for long-term care, medical choices and challenges in retirement, the possible timing of collecting Social Security. Education can be a powerful tool to combat the fear that bag-lady syndrome represents.
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Women live too long for their own good. What a bummer that must be.
I have never heard the term “bag-lady syndrome”. I’m not sure why it is being used here. It is demeaning and insulting. The underlying problem is undoubtedly real and needs to be addressed in a way that focuses attention on solutions rather than “half-joking references” to disparaging names.
Ellen,
Despite the previous comments, I think you wrote a good article.
Thank You for writing about “bag lady”…. it’s a fear I live with daily…. and for me it’s very, very real—painful, and life-taking–as it becomes my most revolving thought process. When financial plans haven’t worked, and the future path is unclear, the fear of being a “bag lady” is almost worse than death.
You have just disparaged a worry that is real and reality based and offered “solutions” that are both elementary and irrelevant. The worry on the part of women is that their savings, in and out of retirement plans, will not be sufficient to provide for them, that inflation will destroy those savings in terms of buying power, and that the financial world will wreak more unconscientable devastation on the “little guy”, alla Goldman Sachs’ morally bankrupt behavior. Stop being cavalier. You are young and have hope for leap frogging over this debacle. Your mother and grandmother do not. Get some depth of understanding and offer some depth of suggestion or none at all.
Thanks for the article. Without the headline, I would not have read it. Glad to be aware.
I am a male, retirement age and still working by choice. I understand “bag lady” concern/fear. Today that syndrome is expanding to include–both male and female– many who now fear/worry about declining values of both investments and dollar. Both examples will/could end up the same—-not enough to get by.
Bag lady is descriptive and sex specific. It is no wonder that it describes a concern for women. The male parallel for bag lady is bag man, who is not a poor street person but either the thief who carries the loot or a person who pays out bribes. Bag man may be insulting and demeaning, but I don’t see that bag lady is.
“Taking on too much risk to try to make up for that last recession or for a lack of savings can backfire tragically, so be sure you are comfortable with your direction.”
The same can be said for not taking on enough risk – a potential problem stemming from excessive fear.
Certainly, being a lonely, impoverished senior is a concern for both men and women. But let’s recall that from time immemorial, the social contract has called for the involvement of the family in the care of both the young and the old. That is still relevant!
We can never absolutely guarantee the success of our financial arrangements (however sensible and well-designed). Let us build strong, loving families during our younger years. If I should live to, say, 89 and find that my savings have been destroyed by inflation or a crash, I know I can count on the help of one or more of my 6 children- they are already offering. For the unmarried or those with no children, loving mutually helpful relationships with cousins, nieces/nephews, friends and friends’ children,etc. can fill that role. People need people.
It is unrealistic to expect money to solve all problems, at any age. Ms. Rinaldi wisely points to that in her post.
The title caught my attention and articulated a concern I have for my disabled partner: how can I leave her enough money to make it if and when I’m no longer in the picture? That question becomes particularly pressing as I decide just how and when to retire. Thank you.
In the past in NYC, people often expressed this as fear of ending up in a single room. Before income-based and rent stabilization, older folks without resources often ended up in stark, windowless rooms with little more than a bed and a hotplate.
The title is appropriate. I retired in 2006 from the military at 53 with a $40K pension still work and plan to retire at 66. My wife is 55 and receives a $15K disability pension from OPM. Our home is paid for, we have no debt other than living expenses, L-TC policies and non-disc that all average $4200 per mo. Upon retiring from the military we opted SBP that provides my wife income equal to 55% ($22K) of my military pension upon my death. It gets the same annual increases as Social Security. We have rental property. It’s paid for but only nets about $6K on a $160K investment. We put the net in the bank to cover future maint exp. I’d like to sell but not in this environment.
I currently make a $50K a year and fully fund my 401K, put $8K in Roth IRAs, $500 a mo. in liquid savings and bank $1400 a month for annual expenses (prop tax, LTC, insurance, vacations). Right now we have $140K in liquid savings and $145K in retirement savings.
On the surface it would appear we’re ok because we can pay our disc. exps from pension income and eventually all with SS when eligible. I fear that if I lost my job before 66 and our retirement savings stopped that we’d come up short.
My main concern is that upon my death my wife would only gross $37K with exps of $41K; $4K short and doesn’t include future medicare premiums). I expect this shortfall to increase over time with add’l expenses.
How many recalculate income if a spouse’s income is lost? How would your spouse…
My mother suffered from this terror until the point she was given only a few months due to lung cancer. Once she came to the realization that she was going to die.. and not end up on the streets, I saw a sense of relief in her life. She actually feared living as a “bag lady” more than she did dying. She instilled that fear in me throughout my life, which led me to abhor debt and to save and invest almost to the point of obsession. I want to ensure my wife and family maintain their standard of living once I join my mother.. so that “bag lady syndrome” remains with me to this day
Thank you for discussing a very sensitive topic that does, I know, lurk in the heart and soul of many women, particularly single woman. Once the ‘spectre’ is out of the closet or from under the bed it can be dealth with in a calm and planned manner. Thank you, Ms. Rinaldi!
As a physician practicing in Florida I see many elderly people. One financial problem I see too often is the situation where a couple have savings and begin Social Security before 65 or now 66, thus taking a life time payment penalty. Something happens causing them to dip heavily into their savings and now they only have Social Security. By being frugal they can get by on their 1.5 combined Social Security payments. Then one of them dies,more often the husband, and now the survivor only has a single Social Security income that is reduced by the ealy withdrawl penality. This is seldom adequate income to meet living expenses and the person faces slow starvation.
I went through the “bag lady syndrome” while going through a divorce from a spouse who earned substantially more than I did … luckily for me, a friend forced me to write down all my assets and take a look at my true net worth (more than I had thought.) Set up monthly automatic investments in Vanguard index funds and my company’s 401(k) plan, and learned to live on what made it to my checking account. So now I keep an eye on the balances, but I don’t wake up at night worrying … even when the market tanks.
THANK YOU
I see gold going from $35 an ounce in 1971 to $1750 an ounce 30 years later because the government is recklessly printing money and I worry that no matter how much I save, it will not be enough. I see no sign that this activity will not continue and therefore a million dollars today will be worth $20,000 in 30 years. About one quarter of all couples will have a person who lives 30 years after retirement. There are few things more terrifying than an irresponsible government.