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PERSONAL FINANCE
Retirement

Retirement: How to beat 'bag lady syndrome'

Nanci Hellmich
USA TODAY
Expert says some people fear "the bag lady syndrome"

A high-powered fashion executive once told New York City financial expert Lance Drucker that she feared outliving her savings and becoming the best-dressed bag lady in Manhattan.

Many people are afraid of "not being able to accumulate enough assets to retire with a life of dignity," says Drucker, author of a new book, How to Avoid Bag Lady Syndrome: A Strong Woman's Guide to Financial Peace of Mind. He's president and CEO of Drucker Wealth Management and a chartered financial consultant.

USA TODAY talked with him about his new book:

Q: Do some women fear becoming bag ladies?

New York City financial expert Lance Drucker has written a new book, "How to Avoid Bag Lady Syndrome."

A: Yes. About 25 years ago, a very successful high-powered fashion executive came into my office, and when I asked her, "What brings you into in my office today?" she said, "My biggest fear is being the best-dressed bag lady in Manhattan." She said she made a lot of money and spent more money, so her biggest concern was whether she could build up the net worth to step off the wheel. She said, "I have all the shoes, clothes and bags that I could ever use, but I don't have the financial assets that will allow me to one day retire with peace of mind."

The next time she came into the office, she wore a lovely new fur coat. She said, "I just bought it because I thought since I will be working with you, I won't be buying things like this anymore. I wanted to have one last hurrah."

People don't necessarily say that they worry about ending up living in the back of their car, but they want to maintain a similar quality of life during retirement as they had during their working years. Many people wonder whether their money will outlive them or they will outlive their money.

Q: You say in the book that 70% of your clients are women. How did that happen?

A: It was never by design. It just happened. I've been in this business about 30 years. If a woman likes you and trusts you as her financial adviser, she's much more likely to recommend you within her social-relationship circle. So it evolved over the years.

Q: What are some differences between your male and female clients?

A: It's hard for a lot of men to admit they are confused and scared about their financial future. Women have no problem saying, "I'm confused about finances. I don't understand them. I don't trust anyone."

Women usually live longer than men, and women typically earn less, so they have less opportunity to put aside money. But most women who receive financial advice end up taking positive financial steps, which ends up lowering their anxiety.

Q: What are some of the biggest mistakes people make in financial planning and investing?

A: Spending too much, not working within a budget, not having clearly defined financial goals and life goals. We spend more time planning our annual family vacation than we do planning our financial future. We get into the market at the wrong time. We get out of the market at the wrong time.

Q: If you could give people one piece of financial advice for retirement, what would it be?

A: Don't let the financial jargon, or the fact that it might be confusing or scary, keep you from doing financial planning on your own or seeking help. A lot of people are intimidated by the financial world. Some people say they don't want to see a financial plan, because they don't want to see the outcome. It's like not wanting to step on the bathroom scale to see your weight.

But you have to figure out what you want to accomplish, do a budget and then from there create a financial plan.

Q: What do you say to people who don't want to invest in the stock market?

A: There are myriad of financial instruments, but the reality is, going back 100 years, stocks outperform every other asset class. We have to have some portion of investments in the stock market, because they are the only financial instrument that has consistently outperformed inflation. The vehicles that make us feel the calmest — CDs, money markets, bonds — typically will not accomplish our future goals.

Q: Do you think people should use a financial adviser?

A: If you have the time, knowledge and interest, there is no reason you need to work with a financial adviser. That said, a good adviser, like a good coach, will help you accomplish your financial goals more quickly, with less anxiety and fewer mistakes.

Investors who utilize a high-quality adviser feel more confident, optimistic and are significantly more likely to stick to their plan vs. do-it-yourself investors.

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