Forget wrinkles and sagging skin, running out of money in retirement is one of the biggest fears working women have these days, and it’s not completely irrational, experts say.
So-called “bag lady syndrome,” or becoming pathetic like Cate Blanchett’s character in the film Blue Jasmine, is more of a fear for women because they earn less than men, live longer than men and usually spend more time out of the workforce then men while caring for children and elderly parents.
That combination curbs their earning power over the years, especially when they likely need to stretch out their savings longer than most men.
“Women of all economic walks of life have a shared fear – and that’s the fear running out of money,” says Caroline Dabu, vice president and head of the BMO Wealth Planning Group.
She cites statistics showing 80 per cent of men die married, while 80 per cent of women die single. Divorce is also on the rise, and more women are choosing to be single.
“The incidents of women spending their retirement years alone is higher,” Dabu says. “Women do need to save for a longer retirement.”
Bag-lady syndrome isn’t a new term, but more people are talking about the concern, and the realistic reasons why women are so worried.
“The very words ‘bag lady syndrome’ can be construed as offensive to some women, but every study we’ve ever seen says the same thing: More than half of all women across all demographics fear ending up broke and homeless,” says Lance Drucker, CEO of Drucker Wealth Management and author of the recently published book How to Avoid Bag Lady Syndrome (B.L.S.): A Strong Woman’s Guide to Financial Peace of Mind.
“The majority of women will be solely responsible for their financial affairs at some point in their lives,” Drucker says, while encouraging the financial services industry to better understand their needs and fears.
A BMO Wealth Institute Report released recently shows Canadian women control $1.1 trillion in wealth, are the breadwinners in one-third of households, hold 37 per cent of management roles, own half of all small businesses and a majority of professional jobs in the country, yet still earn 87 cents for every dollar a man makes.
While these are impressive gains when compared to decades earlier, Betty Draper (now Francis) is historical fiction and we’re 15 years into a new century.
Because this sad reality of women still lacking equality isn’t expected to change overnight, the BMO Wealth report encourages women to get on top on their finances early.
“Women have made some enormous strides from a professional, financial standpoint,” says Dabu. “However, we still have a fair ways to go.”
She recommends women plan ahead for a long, independent, retirement.
“For women, it’s really imperative that they have a financial plan, and stress test it,” Dabu says.