Sep 30, 2024 -

Posted at 10:45 am Rachael DeCosta

Anna and The Bag Lady Syndrome[1]

Anna has an important meeting and is dressed to the nines – she decides to wear the red bottom heels and use the quilted “C” purse that lives in its dust bag carefully placed in the back of her custom walk-in closet.  She uses her new iPhone to schedule a round trip, Uber Black, to avoid the hassle of parking.  She may even have time to grab her favorite Starbucks drink before her meeting.  (Shoes,  Purse, and iPhone total $9,500 and Uber Black and Coffee costs $77 – this does not phase Anna because the shoes and purse are paid for, the new iPhone is $30 per month, and the Uber Black and coffee provide immediate satisfaction – she works hard, has plenty of money in the bank and deserve it!)

The meeting was a huge success. In fact, Anna secured her dream client and a hefty bonus! As she walks to the corner to get into the Uber Black, she encounters a homeless woman asking for money.

How does this make Anna feel?

  • Sadness for the homeless woman and her situation;
  • Compassion;
  • Helpless; and
  • Grateful for having money in the bank, food on the table and a comfortable home.

Men may also share these emotions when coming across a homeless man or woman.  However, we believe men typically do not share Anna’s most intense emotion, FEAR.

Fear that one day, she could find herself in the same predicament as the homeless woman and lose it all.

In the 1970s, this fear was coined the Bag Lady Syndrome. It is believed to be experienced by women from various socioeconomic backgrounds but rarely by men.

Given Anna’s financial situation coupled with her seemingly frivolous and successful day, this fear may seem irrational. However, her fear may be genuine and cannot be diminished or dismissed. In 2013, Allianz Life published a study of over 2,200 women between the ages of 25 and 75.

An excerpt from the study found the following:

For illustrative purposes only.

Unfortunately, financial security and a comfortable retirement seem inaccessible for women suffering from the Bag Lady Syndrome.

Why do more women than men appear to suffer from the Bag Lady Syndrome?

The June 2020 Gender Equality Series, Brookings Institute highlights several factors impacting women in retirement, including:

  • Earnings Potential – Women’s earnings are substantially lower than men’s. Women with children, on average, make 30%+ less than men over their lifetime.
  • On-Ramps, Off-Ramps—Women often leave the workforce to care for children or elderly parents. These intermittent breaks decrease their lifetime earnings and retirement and, where applicable, can impact pension benefits.
  • Social Security Benefits – Women, on average, receive 80% of the Social Security benefits of men.
  • Life Expectancy – Women have higher life expectancies than men and anticipate greater expenses in retirement, led by healthcare.
  • Lack of Involvement in Finances – Men overwhelmingly handle the finances, and when women become single because of death or divorce, they are confronted with a frightening unknown.

5 Action Steps You Can Take Today to Help Recover from the Bag Lady Syndrome

  1. Identify the Root of the Issue—Why do you feel this way? Where is this fear coming from? What keeps you up at night? What provides you with security? Journaling these feelings can help you identify the cause of the fear and guide you to solutions.
  2. Get Organized – Gather your Financial Documents, including Insurance Policies, Wills and Trusts. Ensure you have all passwords, names, and contact information for your Trusted Professionals.
  3. Develop a Budget – include variable and fixed expenses and all sources of income. This may provide the foundation for your financial planning and security.
  4. Create a Balance Sheet – What are your assets? What are your liabilities? This is a snapshot of your overall financial picture.
  5. Interview Financial Planners/Wealth Managers – A holistic financial professional can help alleviate the Bag Lady Syndrome, guide you to financial wellness, and help you realize your goals in retirement.

We take pride in helping our clients on their journey to achieve financial wellness and security. Please email us at rdecosta@saxwa.com or visit www.saxwa.com.

Disclosure

The content is for information purposes only and developed from sources believed to be providing accurate information. We make no representations as to its accuracy or completeness. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Opinions expressed herein are solely those of the individual and may not be representative of SAX Wealth Advisors. Advisory services are offered by SAX Wealth Advisors, an SEC[2] Registered Investment Advisor.

[1] This scenario was prepared for illustrative purposes only

[2] Registration does not imply a level of skill or expertise