What is Bag Lady Syndrome and What Can You Do About It?

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Illustration of frantic looking woman clutching a house to her chest to represent blog titled "What is Bag Lady Syndrome."

Throughout my career, I’ve noticed something odd during discussions with clients. The women specifically often bring up a fear of being homeless or say something like, “I just don’t want to become a bag lady.” This comment is usually followed by an uncomfortable laugh as if the concern is benign, although we both know it is not.

In nearly every case, the women were in a solid financial position and unlikely to become “bag ladies.” So, do they really have a fear of becoming homeless, or are they expressing a lack of confidence in their financial plans? The concern has surfaced enough that I know it represents a genuine fear, so I looked into it and came across the “bag lady syndrome” concept.” That caught my attention! But what is bag lady syndrome, and is it something you can overcome?

What is Bag Lady Syndrome?

A “bag lady” is a descriptive term that refers to homeless women who wander the streets, toting bags that presumably contain all their worldly possessions. Whereas “bag lady syndrome” refers to the fear of finding oneself in this predicament, which many see as a worst-case scenario.

Although these concerns are largely unfounded in the case of my clients, they are not without merit. Sadly, the last few years have shown us that many people live on the edge. So, I understand why one might worry about finding themselves alone, without support, and one wrong decision or catastrophic event away from becoming homeless. 

What is surprising is that this fear of being homeless persists, even among smart, practical, strong women who have been fortunate enough to amass ample resources. Yet it does not seem to be a concern for men at all.

Since my job as a holistic financial planner is to help my clients get to the root of their money problems and gain financial peace of mind, I want to understand. 

Why Do Women, in Particular, Fear Being Homeless?

Person who appears like a "bag-lady" to illustrate the fear of being homeless.

The pragmatic answer to this question is straightforward. Despite a world that is becoming increasingly aware of the detrimental effects of inequality, change doesn’t happen quickly. So, statistically speaking, women have more reasons to worry about their financial futures. For example, consider the following:

Discrepancies in Earning Potential

Pew Research released the results of a gender pay gap study last May that showed that the pay gap in the U.S., while better than it was in the 1980s, has been holding steady. Women, on average, still earn about 15% less than men. Compound this with the reality that women typically sacrifice more of their working years to raise children or care for other family members than men, and the situation worsens. 

If women earn less money throughout their lifetimes, they will likely save less for retirement. That puts women at a disadvantage, especially in the case of divorce, a prolonged illness, or sudden death.

Variations in Life Expectancies

According to the CDC, women live longer than men, by roughly five years on average. So, all else being equal, in a heterogenous relationship, the man is likely to die first, leaving the woman to manage what remains of her finances alone.

This point, combined with the one above, is often one of the drivers behind clients engaging me in the first place, so although they may not know it, they are on the right track. 

The “Traditional” Division of Labor

Now, the statistics are less clear on this point, and modern families come in all shapes and sizes, so ignore it if it doesn’t apply to you. However, I see a bias toward men handling the finances in my practice, especially among older clients. Suppose that means the couple has never had a frank discussion about their current and projected finances. It is only logical that this will create anxiety for whichever spouse is in the dark.

Social Security Concerns

The sustainability of the social security system in the United States has been questioned many times in recent years, suggesting that future retirees cannot rely on the program. However, although reduced payments are possible, the program is unlikely to disappear. Still, since women already face a reduced income stream when their spouse passes, this creates one more reason why women fear they will run out of money.

Below are steps you can take to mitigate these issues. However, I believe bag lady syndrome also reflects a deeper set of fears that don’t respond to rational analysis. I have spent days running numbers and creating charts to explain why my clients don’t need to worry about running out of money. Yet, many still fret. Why?

What is Really Behind Bag Lady Syndrome?

Image of "bag lady" begging.

Despite our amazing brains, which are capable of things we have yet to imagine, humans are not cold, calculating machines. We don’t always use the theory of utility to make rational decisions. Instead, we are subject to emotions, experiences, and relationships that influence our choices. I think this is the source of the fear of becoming homeless. 

By the time a middle-aged woman enters my office searching for help with her financial plan, she has been through countless experiences that have affected her worldview. For instance, depending on her family and culture of origin, she may have received any of the following messages and more:

  • You are especially vulnerable because you are a woman.
  • You are responsible for caring for everyone else, even to the detriment of yourself.
  • Women are not suited to the high-paying fields of math, technology, and science (and, by proxy, finance).
  • Asking for help is a sign of weakness.
  • Resources are scarce. You must work hard at all times to survive.

So, she may feel anxious even though she has worked hard to negate such messages. When you couple this with the following, it’s no wonder that women are prone to bag lady syndrome:

The Fear of Becoming a Social Outcast

The need to belong (to be seen and accepted for who we are) is foundational to the human experience because we rely on others to survive. How does this equate to being homeless? If you have ever watched how people ignore the homeless, you know that being in this state is the epitome of living as a social outcast. So, from my clients’ perspective, their money might be all that is standing between them and this terrifying existence.

The Fear of Death

Western cultures don’t address death as a natural part of life – we avoid it. So it lurks in the corners of our subconscious as the big, scary thing we cannot control.

Financial planning forces us to confront the reality of our eventual demise, which can trigger us to catastrophize. However, the right financial planner will help you prepare for this eventuality while focusing on enjoying your life today.

What Can You Do to Calm Fears of Becoming Homeless?  

Person meditating to calm fears of homelessness.

Like all problems we face (including neuroses around financial topics), the first step is to identify the problem and what you know about the situation. Unfortunately, you cannot avoid bag lady syndrome. Such thoughts and fears arise uninvited. However, you can name your concerns, acknowledge that they are irrational, and take steps to alleviate them. 

For example, the more informed you are, the better you will feel. So, if you haven’t already, find the time to take an honest look at your financial situation by:

Building a Complete Picture of Your Finances

Sign up for (and populate) a financial management solution that will allow you to keep track of all your assets in one place, like Mint or Countabout. Don’t forget to include any whole life insurance policies, individual stocks, or your employee stock purchase plan. Combining these items with your bank and investment accounts will help you get a true sense of your net worth.

Taking Inventory of Your Financial and Life Goals

After you have clear visibility into your financial situation today, write down where you would like to be and the things that are holding you back from living your best life – not just financially but in the pursuit of happiness. All of these things matter in your quest to calm your fears.

Developing Action Plans to Fill in the Gaps

Document the steps you will take to eliminate any gaps in your financial plans. For instance, it might be time to buy long-term care insurance. Or, perhaps you need to meet with an attorney to shore up issues with your estate plan.

Again, do not stop with your finances. Sometimes these fears are due to feelings of isolation or a vulnerability to sudden death, so take steps to develop your social network, make travel plans, etc. Whatever will make you feel that you are in control of your finances and emotions will help.

Finding a Compassionate Financial Planner

When you have reached the limits of what you can do yourself, consider finding a professional who can provide financial advice. But be sure to find someone who will look at your financial situation holistically and listen to your hopes, fears, and dreams before expanding upon your plans and delivering customized recommendations. 

Lotus Flower in a pond to symbolize calm.

Then, when the fear of becoming homeless surfaces the next time, address it head-on. For instance, you might say, “I have an unrealistic fear of being homeless.” Then, walk through how you arrived at this conclusion and what you can do about it. For example, the conversation in your mind might go something like this:

“I have assessed with a knowledgeable and caring holistic financial planner that I have a prudent retirement plan that shows a high chance of success, and that is it unlikely that I will run out of money before I die. Of course, I realize a reputable financial advisor cannot “guarantee” anything to make me feel good (the work is too important and nuanced to diminish it with such silliness), but this is the best I can expect.

Given that the math of my plan makes sense and there doesn’t appear to be anything else I can do to improve it, I have to accept that sometimes I will worry about money. These times are likely to occur when news headlines show scary economic or political events.

When feeling unsettled about my financial position, I will acknowledge that I tend to worry. Then, I will ask my planner to walk through the math again, knowing that sometimes these conversations can surface creative ways to enhance my financial position.

That is all I can do. There will always be products using the word “guarantee,” which are unsuitable for my situation. I am confident my financial advisor would have already brought them to my attention if they were worthwhile.”

Key Takeaways

Bag lady syndrome is a justifiable concern that some women experience when facing their financial future. And it makes perfect sense to feel vulnerable in this way when discussing your finances. Fortunately, you can do something about it, and I am honored that my clients trust me enough to bring it up.

You can find solutions for anxiety about money. It starts with a conversation and ends with a plan, so please do not hesitate to reach out. Or, as always, you are welcome to subscribe to our blog for free tips, tricks, and advice until that time when you are ready.


  • Kevin Caldwell

    Kevin Caldwell is a principal at Golden Road Advisors and a CERTIFIED FINANCIAL PLANNER™ (CFP®️) practitioner with over 15 years of experience in the financial services industry. In addition to providing advice and guidance to clients, he regularly contributes to publications such as Kiplinger, Yahoo! Finance, Dalbar, and MarketWatch.




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