When it comes to things that go bump in the night, poltergeists have got nothing on underfunded retirements.
According to a new survey from MoneyRates.com, 79 percent of respondents have had a specific “financial scare” in the past and 87 percent have money fears about the future.
Of those 87 percent, the top fear is not having enough for retirement. Some other fears:
Debt: 31 percent have had credit-card balances or other bills they could not pay off immediately.
Carelessness: One in 10 admit to having forgotten to pay a bill, thus incurring late charges.
Bounced checks: Three times as many men as women say that an NSF situation was their worst financial scare.
The underlying theme of many of the fears cited? Not having enough money to build an emergency fund, says study author Richard Barrington.
Even if you have a decently funded retirement it’s likely that life will bring unpleasant surprises – a leaky roof, the need to put in a wheelchair ramp – that could knock your budget sideways.
If you forget to pay a bill, the late fee creates a disturbance in the Force. Having your car vandalized (which happened to me) means you’ll have to fork over a deductible before those windows can be replaced.
The lingering effect
As with horror movies, our real lives contain a supremely scary factor: the fear of the unexpected. Layoffs, serious illness, a surge in utility costs – film writers refer to these as “jump scares,” i.e., things that come out of the blue and scare you silly.
This isn’t necessarily just a momentary “gotcha!” Sometimes financial jump scares do more than terrify you – they make you want to crawl into bed and pull the covers tight to your scalp. This can worsen the situation, e.g., you miss another payment or go shopping to make yourself feel better.
“Building an emergency fund is a fundamental step in financial planning. Having that cushion allows you to have less fear of the unexpected,” Barrington says.
People who are already living on the margins find it tough to build that EF, but there’s really no substitute for having one. My former MSN Money colleague Liz Weston notes it doesn’t have to be three to six months’ worth of living expenses touted by some financial wonks.
In fact, the enormity of that challenge might keep some people from trying: The way things are going, how in the world could I ever amass that much cash?
Instead, aim for an EF of $500. Most budgets can be tweaked a bit here and there to automate at least $10 a week into an untouchable account. If not? Automate $10 a month. The Internet is rife with frugal hacks and budgeting tips; you’re almost certain to find some that fit your situation. (For specific tips see my Woman’s Day article, “Trick yourself into saving.”)
Achieving a specific purpose
Those tweaks might not always be fun, mind you. Suppose going to the movies or having two beers with friends every Friday night is your one big treat in life. You work so hard and mostly do without so you can pay off your student loans/consumer debt/mortgage and fund retirement. Are you supposed to do without any enjoyment at all?
It’s possible to hack those things, too: Go only to the second-run house vs. on opening day, paying with discounted gift cards, inviting people over to split the cost of a 12-pack of craft brews and play board games or watch TV.
Yet even if those tweaks aren’t fun they’re part of being an adult. Sometimes you do what you need to do, not what you want to do, to achieve a specific purpose. That half-a-grand EF can go a long way toward dealing with many unpleasant surprises.
It’s not a complete solution, but at the very least it represents $500 less being put on a credit card.
My own financial bogeyman is the bag-lady dream. I say this not to denigrate homeless women but rather to describe a fairly common fear of having no place to live and nowhere to go. In my case it also includes the fear of having to ask for help, i.e., being a drain on someone else.
Marge Piercy wrote a marvelous novel called “The Longings of Women,” in which one of the main characters is a 60-ish housekeeper named Mary. Winding up homeless after divorce, Mary copes, barely. Yet she never tells her daughter, who lives in another state, because she doesn’t want to be a burden. Reading it, I wondered how many men and women whose sense of pride ultimately caused them to lose their dignity, and safety.
So, readers: What’s your personal financial bugaboo, and what measures have you taken to keep it at bay?
Related reading:
When my mom passed away a few years ago, on top of the expected grief of losing her, I realized that, with the sale of her house, my “safety net” was gone. Yes, I was over 30, and had been living on my own for many years, but as I said to my friend, there was always that security blanket that if the worst should occur, I could always go home. Now I don’t have that safety net any longer.
Personally my biggest financial fear is not about me – I have 3 brothers, and 2 of them are on full disability. Mostly I worry about my youngest brother, who isn’t able to live on his own, and doesn’t have a stable living situation – I don’t know what the future holds for him, and for us (the other siblings). When I daydream about winning the lottery, the biggest sense I get is a feeling of relief – a large pile of cash would absolutely give us more options with my brother!
Losing it all. That’s my big fear. I came out of a divorce moderately OK, given that I lost half my stuff. My bogeyman is having my identity stolen, or having something happen to my house, or something similar that wipes me out.
I’m over 40 and in school now, studying to be an engineer. I do work, but I know that it hurts my grades. It is just so terrifying to watch my nest egg erode every month that whenever I think about quitting I just take a deep breath and put my nose back to the grindstone.
I went back to school in my late 40s, after losing just about everything. It’s no picnic. Good for you for going into a STEM field, and with sticking with it despite the fatigue and the nonstop nature of it all.
I’ve also long been haunted by the Bag Lady Bogeyman (to which my BFF adds her personal fearful spin “and with no teeth!”). Just that idea which you described so well of being unable to provide for myself, and of falling through everyone else’s cracks.
Working to have a fully-funded emergency fund, contributing to retirement (I got a late start with this), maintaining appropriate insurance (auto, renter’s, health, disability, life) and living consistently below my means all go a long way to quieting those fears. I’m so grateful that these days, a toothache, a missed day of work, or a flat tire are inconveniences that no longer send my thoughts careening toward tragic outcomes.
Two years ago I inherited a modest amount of money. I was able to get myself out of debt except for the mortgage and I put some of it into a e-fund. Everything was looking good…until last year. It was by far my worst year . I was hospitalized once and a few months later had back surgery. Thankfully, I have insurance that paid for the medical, but I ran out of sick and vacation time so I had to draw from the emergency fund. It is now nearly wiped out. I want to save save save but I am still not flush from last year. My fear is that I will have another medical issue that will not allow me to get the emergency fund to a comfortable level. I was so glad that I actually had an emergency fund to go to that I feel really anxious waiting to get it refilled.
So sorry to hear about the surgery, and so glad to hear you were wise enough to put money into an EF instead of blowing it all. I don’t blame you for being afraid, and I wish you luck refilling that fund as quickly as you can comfortably do so.
I know the situation is fearful; I’d be afraid too. But also remember to pat yourself on the back. You had the foresight to have an EF in the first place. I know it was painful to see it drained, but after all, that is their purpose. Think how much more fearful you would be if the EF didn’t exist and everything had to be financed with debt and credit cards.
What Punkin Pye said.
1.3 million elderly Americans live in nursing homes. 70 percent rely on Medicaid to pay bills that average $83,000 a year.
http://www.facethefactsusa.org/facts/high-cost-nursing-home-care
That’s mine. We can get along fine on our retirement savings unless one or both of us need nursing home care. Then all bets are off.
I think that’s a very common one. No matter how careful we are with diet and exercise, life holds no guarantees.
What Babs said. In addition, DH having to go out on disability before his full Social Security age. We can and will manage, but I’m considering taking a medical transcription and billing course also. (Any advice out there?)
I’d do some research before plunking down the money for a transcription course. It’s my impression that the voice-recognition software is getting so good that some doctors are simply dictating notes vs. hiring someone to transcribe. (The parent of a woman I know is in that field and her impression was that it was shrinking.)
Medical billing, now, seems to me a growth industry: People are always going to be visiting the doctor and insurance companies are all about the codes. But I could be wrong about that.
I’ve got a financial bugaboo for you. How about a divorced friend who hasn’t taken any of your (or anyone’s) sage financial advice for years and now tells you she’s terrified at the thought of retirement since she’s sure she won’t have enough money. She was sure to become a burden to my family with her threat to move to my town. Lucky for me our friendship is kaput since she emptied my guest bathroom of toilet paper and Qtips. Bugaboo summary don’t let your poor planning for retirement make you a burden to your friends and family
Wow. She should get Liz Weston’s books from the library and start reading.
Stole toilet paper and swabs, huh? Sad.
Everything and nothing, I guess, since it all falls under the whole baglady syndrome for me as well. I’m on a huge push to get all our finances and estate planning in order (theme of last week’s post) in case of natural or medical disaster so I spend an awful lot of time thinking about these things and trying to mitigate.
We’re finally at a point where getting dinged with (and dealing with) the rare late fee or Oh Shit! penalty isn’t horrifying because we have the cash flow to cover it but the new worry is that because we have a bit of a sprawling shared set of finances, I’ll miss those fees the way I never would have when it was just me.
If anything, I’m trying to repress the horror of the continued responsibility for my errant father and totally off the rails sibling. I remember the swamp of stress that having to foot the bills for my family without full transparency was, they’d make some mistake and hide it, I’d have to pay twice or thrice to fix it. We moved away from that situation largely by dint of my taking over every bill and paying all of them, but as I detach those tentacles partly at his insistence and partly for my own sanity, I see that Dad’s still not keeping it together and still hiding those mistakes from me. This is going to be a lifelong battle with him and I don’t have the energy to keep fighting him.
What a difficult situation. I’m sorry that these responsibilities keep falling to you.
Anyone who hasn’t read Revanche’s site, AGaiShanLife.com, should go take a look.
Ah well, I have PiC to help shoulder the burden at least and that’s something I never thought I’d say. Thanks for the point-over.
I am a 50something fear being without a full-time job before I am ready to transition to my post-corporate gig.
I work in an industry that is influx and my boss has told me I am the highest paid person on his team so I know I am the “tall blade of grass”.
I would like to live where I currently live when I retire but if my corporate career is unexpectedly cut short, I will sell and move to a lower cost area.
I have retrained for another function/different type of role but haven’t been able to make that transition at my current company. It may make sense to try to make that change to another company/industry that is a bit more stable. I have been working to become bi-lingual (Spanish) so I have another skill I can offer.
If I were to be laid off and couldn’t find a job with in 6 months, my backup plan is to join the Peace Corp (really get a chance to use my Spanish) and then maybe Teach for America since I have always wanted to teach. Both of these options would offer health insurance which is important since the goal is to make it to 65 without having to buy insurance under ACA.
I don’t worry about my siblings since one has a pension and the other multiple rental properties. My mother remarried a couple of years ago so I know her financial house is in better shape now. I do have a good close friend who is not as prepared (mostly due to health issues) and will help her as much as I can.
Yes, I have emergency savings and plan A, B & C but still have those dark nights where I worry about being a bag lady since I am a single woman.
According to the AARP, four million women over the age of 50 live in households with two or more women of the same age group. Is there any chance that you and your friend and/or some other women could throw in together for housing? The money saved by sharing could go toward bolstering your EF and retirement funds.
Not everyone is cut out to share, but perhaps you could broach the issue with your friend.
I hope you escape the layoffs and can finish out in your current field.
Thanks for reading, and for leaving a comment.
My biggest fear is a “health catastrophe”…My Dear Dad has had a litany of health ailments that began when he was 50. And as a result has been taking meds for almost 34 years, underwent two bypass surgeries, has had 14 stints installed, had a lung removed and is now fighting lung cancer via chemo. He has “stellar insurance” thank goodness, as he is a retired fireman. I will not have that luxury. What’s even scarier is my health has been relatively good and based on my Dad’s history I am vigilant with annual check ups and staying active. Maybe it’s a “crap-shoot”….just the same this is a continuous concern for me.
Could be a total crapshoot. My grandmother’s health was always poor yet she outlived her strong-as-a-bull husband. (In fact, my father had his mom longer than I had mine.)
Since I know how active you are with property maintenance and such, the worry that you won’t be able to keep doing it is probably an issue. On the other hand, staying active might help you stave off infirmity. A relative of mine has spinal stenosis but the symptoms are quite minor; in my un-medical opinion, it’s because he has stayed so active and busy all his life. Long may that continue!
“Spinal stenosis”…relative of Dear Wife has that and as I understand it…very painful. Worrying about keeping up on property maintenance is an issue as I age. Having to pay someone to do the stuff I do changes the whole business dynamic. At some point a change will have to be made….
I think my biggest fear is having a domino effect of challenges that would wipe out our savings, investments, and emergency fund. It’s pretty much a “worst case scenario” fear, but, it’s there nonetheless. If multiple things all went wrong at the same time, that’d be my fear.
Scary, but a potential reality for just about anyone.
I have two. The first is being unable to feed my family. This is not an entirely irrational fear – I distinctly remember a period where the four of us ate mostly dried beans, rice, cornbread and potatoes, supplemented with 5-lb. blocks of cheese from the warehouse club where my parents bought us a membership every Christmas. More recently, there was the time of chicken leg quarters and homemade bread, with no club membership to fill in the gaps. That fear’s abated some since the kids are old enough to work, but it haunts me.
The other is that a family member, deep in debt, unable to work and unable to budget, will become completely dependent on us and throw our finances into a tailspin. This individual can NOT live with us, and already needs more financial help than we can provide. They and their spouse currently live in a house they inherited, with money in trust to pay for taxes and insurance – but that money is trickling away and there’s no plan for the future. Except us.
I suffered a serious health crisis in 2013 and am now disabled. I am getting retraining and rehabilitation and look forward to working in the future, but it’s plenty scary right now. All I can do in the moment is to take on as many household tasks as possible, work to recover my own health and strength, and plan for the future. Some days, it feels almost like we might pull through.
Perhaps you could use some of your time to look for social services and agencies that could help your family member? As blunt as this may sound, you cannot save your family member at the expense of your own family’s security.
Also: People ask for what they want because they hope someone will provide it. If you and your husband said “no” to some of it, then they would have two options: Do without the item or find some other way to obtain it. (I know a woman who is a social worker. She says people who ask for a lot are accustomed to hearing the word “no,” but it doesn’t stop them from asking because sometimes asking works.)
If that’s not possible (“can NOT live with us”), then once again: You have to do what’s right for you and your family. This other relative is not making good choices but s/he is making them as an adult.
My daughter and son-in-law invited his bankrupt parents to move in. It has been quite an adjustment and the two of them have had to set some serious boundaries regarding what they can and cannot do for the in-laws. Having watched this dynamic from afar, I can say that it isn’t easy and I feel for you.
Thanks for being such a consistent reader and commenter.
Oh, donna, you’re absolutely right – we can’t help anyone, any way, if we don’t keep ourselves afloat, and their lives are theirs to deal with.
I probably made the situation sound worse than it is. The partner who can, works, but is having trouble getting full timehours without a vehicle. The other, I learned yesterday, is applying – but someone older, with gaps in employment and mobility issues, is a tough sell. Yes, they’ve tried applying for disability. They are getting some help from social services. I don’t know what or how much, but assume they have a caseworker who can help them find and apply for things they qualify for. I’ve suggested Vocational Rehabilitation, but that’s the best I can come up with.
They don’t ask us for money, though they have asked, if we can, for help replacing their car. It’s just…the house. And the knowledge that once the trust runs out, they can’t afford the taxes and insurance at their current income, and probably can’t afford anywhere else, either. I feel as though I have to plan for it, because there has to be a plan, and if they end up able to manage, so much the better.
They can’t live with us because all their friends and connections are where they are, because they are packrats and (sorry, guys) slobs, and because all the bedrooms in our house are currently inhabited.
I’ve been pretty close about my own situation, but basically, in 2013 I survived a massive brain tumor, but not before it savaged my optic nerve. I was pretty debilitated for a while, but my strength and stamina are recovering, and I’ve got more drive and focus than I had had in a long time. I just can’t see.
Luckily, I have been able to get help – from my family, from the Division of Services for the Blind, and now from Vocational Rehab. My current goal, financial help permitting, is to go back to school and get my Master’s degree in Vision Rehabilitation Therapy, so I can help people with low vision or vision loss find the right techniques and technology to help them adapt.
I know we’re going to make it. It’s just a matter of getting there. You’re a great example of that, and you and your blog are one of my inspirations. Thanks for being here.
Oh, Sherry. You’ve hinted in the past about temporary disability, but…Wow. I’m sorry about losing your vision. I’m in awe of your ability not just to cope, but to make lemonade of such a life-changing loss — wanting to work with others in this situation is admirable. I expect that if I were to lose my vision, I’d rather work with a rehab specialist who had already gone through this, vs. a well-meaning sighted person.
Glad your friends have a caseworker. It sounds as though they’re going to need one, especially as the trust ticks down. If they’re borderline hoarders I doubt they could find a paying roommate, but could that be an option? It would help them pay for the taxes et al.
Thanks for being such a consistent reader and commenter.
My biggest fear is that this government of ours keep taking more money from my middle class family! I cannot believe the change in my standard of living in the past 5 years…no raises in pay but raises in taxes and health insurance preumiums. I help my child pay for his college education because I do not believe that student loans are “good” debt. I am watching our young people come out with student loan debt and they are snowballing because of higher interest rates and no “good” paying jobs that were promised by our Commander & Chief. Private student loan debt is the worst by my daughter that took out some student loans at 4.2% had hers raised to 6.5%…I don’t feel the is fair…she signed for 4.2% not 6.5%! MY BIGGEST FEAR IS OUR GOVERNMENT AND TAKING FROM THE WORKING MIDDLE CLASS SO WE CANNOT SAVE AND ARE FORCED TO DEPEND ON THEM!
I am glad I am not alone, as I too have had bag lady dreams. It isn’t too often anymore. We do have an EF and only hubby has a 401K that he didn’t draw from yet, but I constantly worry. I am afraid to spend a penny on anything for fun, as afraid of the stock market tanking and then not having that 401K later. We have enough to get by on and are in better financial shape than alot, but you still worry about things just the same. Some of this comes too, from watching my grandparents and mother struggle to make ends meet and always hearing about the depression days. I grew up being a penny pincher.
Same here, Lisa. My husband finally got his first raise in 4 years. For years prior to that, his raises were only 1 to 2%. In the meantime, the cost of everything has skyrocketed. We are still middle class but I have to watch every penny to stay that way. I think it will get to the point where a person who has food, shelter, clothing, and transportation, will be considered well to do.
Thanks for this post, Donna. Right now, despite my long standing catastrophic health issues, My husband and I are what I would call “Middle Middle Class” but I still suffer greatly from the bag lady syndrome. If the Lord is merciful and doesn’t allow him to be laid off, my husband will retire with a pension and retiree medical benefits. Our house should also be paid off so we should be debt free once we reach 65 with the possible exception of a car payment. I hope that I will have a working kidney transplant and be able to work at least part time in retirement. My husband plans to work at least part time too. If we can continue to pay the premiums on our long term care insurance, we’ll be good there. My biggest fear is that we will not have enough money in retirement even with no debt, Social Security, a pension, and a 401K. We have saved 10% in our 401K since our early 30’s, but believe it or not, at this time only have about $130,000 (we are both 56). Unfortunately, the investment options in our plan were not the best and the 2008 crash reduced our money by about 40%. The bag lady syndrome always haunts me, but I have to rely on my faith to get me through.
Mine is:
1) Debt. Student loans, medical, & emotional (divorce debt). I now have a solid budget in place & am trying to use the cash system + snowball method to pay it down, very slowly but surely.
2) Medical expenses. Although I have insurance (I just blogged this morning about annual enrollment), I’ve incurred a fair amount of debt. a) Seeing a therapist after my mom died unexpectedly & I went through a divorce; b) Having a procedure done after mom died to see where I stood in terms of family history; c) A couple dental emergencies, despite taking care of my teeth. To alleviate some of the sting, I’m bumping up my HSA contributions in 2015 in *hopes* I can cover all “expected” expenses and pay down the rest of my medical debt.
3) Unexpected expenses in general. I have a small emergency fund ($1000), but that could be eaten up quickly. So I try to do what I can to leave that fund alone, i.e. regular maintenance on my vehicle to keep it running as best I can.
Oh, that divorce debt. I couldn’t wait to finish paying it off. Gah.
I’m about to plunge into the Healthcare.gov system as well, once it goes live. My Blue Cross/Blue Shield insurance was supposed to have doubled last year but the state of Alaska required them to keep us all on at that rate for another year. We’ll see how ACA works for me. Fingers crossed.
Good for you for having an EF. So many people don’t/can’t make this a priority.
Donna, please share your experience with health insurance and the ACA. Like you we here in the “Free State”, where nothing is free, see headlines of Blue Cross putting in for increases of 25-35% and the State regulators knocking the increase down to 8-10% and victory is declared. I’m in a “grandfathered plan” and the last time I checked the guidelines were very “foggy” for the self employed for the ACA. Word of caution, here anyway, folks who have a lot of deductions or have experienced a drop in income wind up on Medicare/Medicaid. Which seems great until you realize your Doc isn’t accepting Medicare patients. AAAAnd Dear Brother has begun the “long trek” of divorce…any words of wisdom?
We’re retired and all the children are grown and gone, and I do mean GONE. We have lived frugally and down sized to a house we could pay cash for, so financial worries are smaller. I realize this isn’t a financial worry but I have constant nightmares of my husband dying before me, which of course is very likely to happen as he is older. It’s hard not to see how older women who are alone are invisible.
My parents moved out of our very bad neighborhood when their house got torched for the second time. It wasn’t so bad when we moved in, but the transition to terrible was swift and complete. When they moved, their new neighborhood also went downhill and was an unsafe place to live within five years or so. I bought my house in a pleasant, relatively safe working class neighborhood a decade or so ago, but with the disappearance of working class jobs, my neighborhood is also in decline. My job/career will be ending at the end of the year, and my question to myself is if I should move (it’s affordable, still pretty ok and close to family) or get out now, Now, NOW, even if I can’t afford it. Yup, I lose sleep over it and sometimes just wake up angry.
Do I agree with the comment on government!!!
My fear is the housing market will crash, and I will lose the nest egg of my home.
I am doing fine right now, but I am thinking seriously of selling my expensive car, driving a less costly one, and adding the difference to savings. Right now I only have $8,000+ in my account. I am retired, get a good pension and SS, and my TSA will begin in 5 years. The only problem with the TSA is that taxes will be sky high!!!
I am so frugal I am almost cheap, but I never steal Q-tips or tp. I do, however, watch every dime.
I live in an old houses so my biggest fear is expensive essential repairs. Although i now have a good emergency fund(thanks to your blog and others like it) I never get enough saved for other home improvements. My second biggest fear is dental emergencies, crowns root canals etc.
I hear you on the dental work. My sister, a dental hygienist, cleaned my teeth for free when I lived in Seattle. She pointed out that a couple of my older fillings will eventually need replacing. In addition, I have a “Maryland bridge” that’s now 30 years old; every day I expect it to collapse. Although I have dental insurance it will pay for only half. Sigh. Teeth.
I had a Maryland bridge which did collapse last year. It was on the bottom to the side. I am still considering whether to go for implants(enormously expensive though tax deductible). The dentist has assured me that leaving the gap will have no ill effects. It is not in an obvious place. I have had numerous fillings replaced including one a couple of weeks ago.