Bag lady specter haunts women

August 27, 2006|By Kara McGuire | Kara McGuire,McClatchy-Tribune

MINNEAPOLIS -- Gladys Karhu used to put her soft-drink cans aside so the woman who collected them in her St. Paul neighborhood wouldn't have to pick them out of her garbage.

Say the term "bag lady," and an image of that woman comes to Karhu's mind. A 76-year-old retired hospice nurse, Karhu and her husband have a small pension, Social Security and retirement funds. Nevertheless, Karhu wonders whether one day she'll need to pick up cans for cash. "Will the money we have put away last until we no longer need to worry about it?" she said.

She's not alone. Nearly half of women - even the ones earning six figures - fear becoming a bag lady. That's according to a study about women and money released last week by Allianz Life Insurance Co.

Even more startling: 90 percent of the 1,925 women surveyed said they feel financially insecure. Yet women are better educated, work more and earn more than they did decades ago.

"Here they are, controlling more money, and running countries, and running companies and taking care of their family, and 90 percent are somewhat or very insecure," said Lisa Resnick, a division president at Allianz.

Amy Wolff, a certified financial planner and certified divorce financial analyst in Edina, Minn., says that in her experience, the results are "absolutely accurate. Just about every woman who comes into my office is just terrified to death they are going to run out of money," she said.

Why the fear? Women have longer life expectancies, but typically earn less than men. Some spend years out of the work force raising children. "We [women] have less money available to put away for retirement and we have to make it last longer," Wolff said.

Unlike many of the women surveyed, Donna Adams, a project manager for a software company, is confident about her finances. "I know where the money is coming from and how we're spending it," said Adams, 33. She and her husband play an active role in budgeting and spending decisions and visit their financial adviser together.

That confidence places her in the Allianz survey's "Wonder Woman" category.

Curious about how the study could find that 90 percent of women feel financially insecure yet 41 percent identify with confident characters like Wonder Woman and Goldilocks?

A spokeswoman for Harris Interactive, who conducted the survey for Allianz, said to remember that women who relate to Wonder Woman and Goldilocks may still harbor some financial insecurities. But they are more secure relative to characters such as Cinderella and Alice in Wonderland.

The survey had a margin of error of 1.7 percentage points.

According to the study, one in every five women who aren't involved in their family's finances blame a lack of time. Two of five say it's because of a lack of knowledge.

Wolff spends a lot of time trying to bridge this knowledge gap by discussing basic financial concepts with her clients, half of whom are women.

"I think education is the No. 1 key to help alleviate some of the fear," she said. "Often we're worrying about things that aren't going to be reality."

The study also found that women think differently about investing than men. Only 19 percent of women are willing to take significant risks for greater return versus 32 percent of the 1,258 men surveyed. Women also want more predictability, security and simplicity when it comes to investing.

"They don't want the hot stock or the hot tip," said Resnick. "They want the hot plan."

And they want to work with women advisers. Women are more than twice as likely as men to choose a female financial adviser, the Allianz study said. But only 20 percent of advisers nationwide are women.

Reznick hopes the study will raise awareness of the dearth of women advisers as well as the lack of attention the industry has paid to potential female customers. It could prove to be a lucrative market. According to consulting firm TrendSight Group, women will control 60 percent of the wealth in this country by 2010.

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