49 percent of women fear becoming “bag lady” in retirement

Nearly half of women fear becoming a “bag lady” when they get older, despite the fact that 60 percent of them are the primary breadwinner in their household and 54 percent are in charge of the finances at home.

According to the 2013 Women, Money & Power Study from Allianz Life Insurance Co. of North America, 27 percent of women earning more than $200,000 a year shared the same fear.

The study, conducted with more than 2,200 women ages 25 to 75, with a minimum household income of $30,000 a year, revealed this fear extends to all corners of life and affluence and was highest among single respondents at 56 percent, but also a significant concern for 54 percent of divorced women, 47 percent of widows and 43 percent of married women.

Despite feeling more empowered about financial planning and having more responsibility for financial decisions than ever before, many women believe that empowerment is potentially alienating to both men and other women. Forty-two percent said they believe financially independent women are intimidating to men and often end up alone, 31 percent said those women are hard to relate to and often don’t have many friends. This feeling was even higher among single women at 47 percent and 32 percent, respectively.

“When Allianz Life conducted the initial wave of the Women, Money & Power Study seven years ago, we discovered that women everywhere – even well-educated, successful, financially independent women – have major gaps and unmet needs when it comes to achieving comfort and confidence with money,” said Allianz Life Vice President of Consumer Insights Katie Libbe. “Today, women clearly feel more invested in financial planning, however, fears of fiscal failure still persist. The real message here is that the financial services industry needs to help women learn about money and prepare for their retirement.”

Fifty-seven percent of all women surveyed said they both “have more earning power than ever before” and also “handle major investment decisions and retirement planning.” More than half (55 percent) noted they take the lead in suggesting new investing or retirement ideas and 60 percent said they were responsible for handling tax preparation and planning.

Women also believe that today’s woman needs to be much more financially involved and are clear in their understanding that their financial knowledge translates to an improvement in the quality of their lives. More than 90 percent of women surveyed agreed that in today’s world, women need to be significantly more involved in financial planning than in the past, with the highest response (96 percent) coming from divorced women.

Sixty-seven percent of women surveyed said that becoming more knowledgeable and involved in managing their finances has improved the quality of their life, with the highest response (71 percent) coming from single women.

The financial crisis of 2008-2009 was a major driver of this behavioral change, with 68 percent saying they have increased their financial involvement since the crisis, particularly women ages 45-54 (72 percent) and widows (75 percent). Yet, despite the increased involvement after 2008, 43 percent of women surveyed said they don’t feel any smarter about how to manage their money than before the crash. That feeling was shared by 36 percent of women with household income of $200,000 or higher.

This builds on the idea that, in addition to the bag lady concern, a majority of women still have significant concerns about retirement planning and their level of preparedness for retirement. When asked what key issues will have the greatest effect on their retirement outlook, “lack of adequate retirement savings” was the highest ranked issue by 43 percent of women surveyed, besting other economic concerns such as “the future of Social Security,” “rising health care costs,” “unemployment,” and “tax changes.”

Similarly, retirement is also the worry that keeps most women up at night. Second only to loss of spouse/significant other, “running out of money in retirement” is a worry that keeps 57 percent of women up at night and is the number one worry for single and divorced women.

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