Half of U.S. women fear becoming "bag ladies"

(MoneyWatch) Women control a larger share of personal wealth in the U.S. than ever -- 66 percent, or about $41 trillion worth of assets, according to Wilmington Trust Investment Advisors. Yet with all that money, women are still freaked out about their financial futures.

According to the 2013 Women, Money & Power Study from insurer Allianz Life, nearly half of all American women fear becoming a "bag lady." Such concerns aren't limited to people who are struggling financially: 27 percent of women earning more than $200,000 per year sharing that fear. The study found that anxiety about ending up broke are consistent across all types of women, though highest for single respondents (56 percent); it also a significant concern for divorced women (54 percent), widows (47 percent) and married women (43 percent).

Sadly, the bag lady fears persist, even as women are feeling better about their earning potential. Some 57 percent of all women surveyed said they both "have more earning power than ever before" and also "handle major investment decisions and retirement planning"; 55 percent take the lead in suggesting new investing or retirement ideas; and 60 percent said they were responsible for handling tax preparation and planning, especially in the aftermath of the recession.

Yet 43 percent of women surveyed said they don't feel any smarter about how to manage their money than before the housing crash. While each situation is unique, it's likely that the root problem is that the majority of these women don't know where they stand financially.

As a lifetime member of Weight Watchers, I often compare the process of analyzing your retirement needs to getting on the bathroom scale: Sometimes it's a pleasant surprise, but more often than not it forces you to face an ugly truth. Just as taking the dreaded step onto the scale is a necessary part of the weight-loss process, so too is crunching the numbers for retirement planning. According to the 2013 Employee Benefit Research Institute (EBRI) Retirement Confidence Survey, only 46 percent of American workers have calculated their retirement needs.

If you work with a financial advisor, he or she should have completed a retirement needs analysis. If you are flying solo, use the EBRI's Choose to Save Ballpark E$timate or a calculator offered from your retirement plan provider or mutual fund company. The hard part about using these calculators is that they ask you to estimate several factors that even economists can't agree on. Here are some reasonable estimates:

Inflation assumption: 4.5 percent (higher than where we are today, but most economists believe that inflation is headed up in the coming years).

Rate of investment return both before and after retirement: Consider your risk tolerance and err on the side of being conservative. If you're stuck, use 4 to 5 percent. Obviously, if you use a higher rate of return, the calculator will ultimately determine that you have to save a smaller amount. Of course, higher return assumptions may not always work out as planned.

Life Expectancy: if you are younger than 50, use 95; if you're older than 50, use 90. If you want a closer estimate, go to www.livingto100.com and use their life expectancy calculator.

Many calculators will take a percentage of your pre-retirement earnings (most use 80 percent) as a baseline for what you will need in the future, sometimes called a "replacement rate." A more precise way to determine that number is to figure out how much you spend today, isolate those expenses that won't occur in retirement (for example, mortgage payments, tuition or child care) and poof, you have your replacement rate. When I was a young financial planner, it was common practice to remove Social Security and Medicare taxes from your anticipated future need, but now I think it's probably best to assume that the money you were paying in FICA will be necessary to pay some or all of higher health care costs in the future. So leave that amount in for your calculation.

Then you will be asked to plug in the amount of money you have already saved, your annual contributions to your retirement plans and other investment accounts, any future pension amounts, and a Social Security benefit. While Social Security might change in the future, most of the revisions being contemplated would not affect people who are currently over 50. For those under 50, you might have to wait longer to collect benefits or the benefit amount could be reduced. To adjust for an altered Social Security landscape, you could simply raise your replacement rate by 5 percent.

Once you have entered all of the information, the calculator is going to spit out your results. For many, this moment could be as stressful as stepping on the scale. But only when you are armed with the necessary information can you change course to achieve your retirement goals. And women, please don't be afraid to take the plunge. It will ultimately provide you with greater control over your financial lives.

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    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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