Money Matters - Women & Money: Bag Lady Syndrome
BOSTON (CBS) - I would like to proclaim this week, national Bag Lady Week. This is a woman's biggest fear, that she will be penniless and homeless as she ages and that she won't be able to afford medical care or health insurance.
This fear is referred to as the Bag Lady Syndrome. This is a universal concern. Rich, poor, middle class. And women do have valid reasons to be fearful. Even today with women so much better educated than their mothers.
The average woman age 65 and over lives six years longer than the average man. As a result, she is typically widowed and living alone. If you visit a nursing home you quickly pick up on the fact that most of the residents are elderly women.
She struggles to make ends meet on an average annual income of about $16,000 compared with over $29,000 for men. According to the Census Bureau, nearly one-in-five women who are living alone live in poverty.
During her lifetime she probably spent 17 years raising her children and 18 years caring for elderly parents and possibly her spouse. Her retirement income is also smaller because she probably did not receive a pension, and was paid less over her lifetime than the average man. Less than 33% of women will receive a pension as compared to 55% of men. Women are more likely to work part-time so often they are not eligible for a pension.
She receives lower Social Security benefits. Women are the face of Social Security, comprising almost 60% of beneficiaries over age 62 and 70% of recipients over age 85.
For 29% of the unmarried elderly women Social Security is their sole source of retirement income. The average monthly Social Security check for a woman is $914. That's $275 a month less than that of the average man and over 20 years that's close to $66,000.
The numbers only get scarier! Seven out of ten "baby boomer" women are expected to outlive their husbands/partners. Many will be widows for 15 to 20 years.
Over 50% of first marriages end in divorce and 43% of first marriages break up within 15 years. With second marriages you would think people would have learned from the first go round. Not so! More than 60% fail and the average duration is six years. During the last decade, midlife divorce has tripled.
My conclusion: women need to put retirement planning at the top of their goal list. They need to think about that when they choose between sending the kid to summer camp or stashing the money in a retirement account.
