What does Nomadland have to do with financial planning? Many people deal with intense fears of poverty in old age. The film Nomadland, starring Francis McDormand, portrays people who are living in cars, vans, and RVs. Some of these people are elderly, many are not. All of them are about more than the vehicle they live in. Bridget and John talk about fear of poverty in old age. We talk about the fears that people have concerning running out of money. Then we go into depth about how to best deal address these fears.
TRANSCRIPT
Bridget: Nomadland just won an Academy Award. What does that have to do with financial planning? That's what we'll talk about today on Friends Talk Financial Planning. Hi, I'm Bridget Sullivan Mermel. And I have a fee-only financial planning practice in Chicago, Illinois.
John: And I'm John Scherer. I run a fee-only financial planning practice in Middleton, Wisconsin. And I'm really looking forward to today's topic, and hearing really what you have to say about it Bridget, because there's two issues that I don't have a lot of experience with; one, I'm not a movie guy. I know of Nomadland, I know that it was popular, but I want to hear about it. And then how it applies to financial planning, and that part I do at least a little bit know in that there's a thing called Bag Lady Syndrome where there's a legitimate, it sounds kind of weird, but there's a legitimate fear for women, for sure. And I think for men too, of not having enough and being in a position of poverty and homelessness. And my sense is that it might be legitimate. It might be sort of an irrational thing that we can talk about. So, I'm really interested to hear how you deal with and help people to think through things. Tell me a little bit about how this relates and your experience.
Bridget: Yeah. Well, let me just tell you about the movie a little bit. The main character gets in a van and travels around the country, and a lot of it is motivated by not having enough money, her financial situation. Let's put it that way. But during the movie, they really talk about choices and having enough versus not having enough. And you can really see the culture that's around it. So it's very, the culture that's growing up around this whole topic, and it's really fascinating. I found it fascinating. But it gets to an underlying fear I think that a lot of people have, about just ending up at the end of their life without enough. And I think that there's two things that really come into play. First are the fears. And then we'll talk a little bit about the reality because you can be so afraid that you don't actually look at the reality. And I kind of think about it like if I'm at alone at night and I'm sleeping and I hear a noise, it's like that can just fill me with so much fear, I don't even want to look at the reality of like, okay, what's going on? I don't want to get up. I'm just going to sit here fearful. I think that's, I think that feeling of that, I guess “deer in the headlights” feeling is what a lot of people, again, both men and women feel about when they think about long term retirement, and then they have this fear on top of it with just feeling totally abandoned.
John: It seems like, as you described, I thought that was a really neat explanation. And my first thought was it could be a burglar, or it could be a squirrel. Right? Like, of course, the squirrel is not that scary.
Bridget: The wind.
John: Is it the same in your sense that this sort of Bag Lady Syndrome is “hey, there's some legitimate…there's a reason why you might have this fear.” But then on the other side of it, maybe the reality perhaps doesn't always or doesn't often even correlate with how people feel?
Bridget: Yeah, that's absolutely true. That the reality does not correlate with our projections of what your future might be like. And it's really a fear, which is, it's an emotion right? And so we really need to deal with those as emotions, recognize them, maybe write about them. A lot of fears that are common that lead to a Bag Lady Syndrome, I would say are fear of abandonment, fear of no one helping, fear of being ignored. All kinds of fears like that. But it would be very specific to each person. And then maybe even think about where have I felt like that in the past? So, if you recognize it and feel it, it's not operating in the background. Just get me on when you're trying to get to sleep at night.
John: It seems to me that perhaps this is something that I could relate to in terms of fear of being a “Bag Lady” and maybe fear of flying. I used to be irrationally, in my own mind, afraid of flying. And it's safer in the airplane than driving to the airport. Right. It's just the facts. But up in the plane, and there's nothing below you, these thoughts process. And for me, it was learning about and getting some facts, like what goes on and all these different things. I can tell you some, a plane without engines can float so many miles for every 5,000 feet of altitude. So just sort of the facts and the knowledge was really helpful for me. And it seems like maybe this is the same sort of thing that the fear is, right? The feeling is very real. I can attest to that. But then perhaps some of the facts on the other side and having some background on why being a Bag Lady for most people, is not going to be a concern when you have Social Security and things like that.
Bridget: Exactly. So let's switch over to talking a little bit about the facts, because I don't think that just addressing the facts solves the problem, because I don't think that if you just looked at facts, you probably wouldn't feel this way because it's really an emotion, but it definitely helps. So, looking at the facts makes sense. With Social Security, we just looked it up and it looks like people average Social Security is about $1,500 a month. John did the math, and it adds up to $18,000 a year. Now that’s not…we would aspire to have people, our listeners, make a little bit more than that and live on a little bit more than that. But it's not Bag Lady.
John: Right. And I've got a little bit of experience in this myself. That one of my grandmother's that's in retirement her income was Social Security. Yeah, I've seen not living off the fat of the land by any stretch, right? But at the same time, not worried about putting a roof over your head and those sorts of things. And as you think about, if you're part of a couple, if there's two people at that level, you go “okay, again, not maybe what we all want” and there's some aspirational things. But from that downside protection and being in spot of “Jeez, am I going to be able to afford food?” and those sorts of things.
Bridget: Right, exactly.
John: I really appreciate what you said, as far as it's not the only, like looking at facts doesn't solve everything.
Bridget: Right.
John: Sometimes there's a base point where your mind tells you these things. Right? It sort of tells you this narrative. And maybe if some of that narrative isn't grounded, that can help you address the feelings and think about that a little bit more.
Bridget: Yeah. Another factor for people is a phenomenon in the financial planning industry called loss aversion. It's like people taking losing money in the stock market or even just having to take a few notches down in their life cycle or a new lifestyle that can make people feel really bad in thinking about it thinking “Oh, I'm not going to be able to live at this current lifestyle, and I'll be living on less money” that can make people feel bad or feel ashamed. And that feeling ashamed about it, again, that goes into identify your feelings category, because I don't think that there's a necessity to feel ashamed about it, but I think a lot of people probably do. So it's just an interesting thing to see. Okay well what are the, let me try to identify the emotions that are leaving all this dread. I think dread is probably a feeling that a lot of people have in this situation.
John: You reminded me when you mentioned shame that having these feelings it's really common. And a mutual friend who had lost her spouse and here this person's a PhD and Austin financial planner, and she talks about having Bag Lady here. I'm worried about if I have enough money and you go, logically, I know she's smart, successful, and you get the feeling there. So that's one thing I wanted to say is that having these feelings isn't something to be like, this is normal, right? It really is. So what sort of takeaways if you had to summarize things, Bridget, for action items or that sort of thing, if people are having these feelings, what should they do? Would your bullet points be?
Bridget: I would say write about your feelings. Identify your feelings and write about them, you know, so that you can get because I feel like a lot of times the biggest problems with feelings is trying not to feel them. Like when you actually sit down and go “Okay, what do I feel where is this coming from?” that actually helps you work through better. And then take some action, action helps. Say you think “I'm going to just live on Social Security.” Well, how much is that? How does that work? How would that work? What other, perhaps sources of income can I have? And then a lot of times people have a small amount of money or some nest; figure out what you want to do with that. And I'm not a big proponent of annuities. But if you're really dominated by these kinds of fears, if you got an immediate annuity, so you said “Here's my money just pay me back in an income stream”. That's a reasonable time to get an annuity, as far as I'm concerned. John what are your thoughts, what are your recommendations for action?
John: I love that idea of I heard you say is accepting the feelings. Identify them, acknowledge them, and it is what it is. And then there's tools, Annuities. There are tools to do it. But recognizing and not running from the fear. That's a great one. And then looking at, for me being more left brained or whatever it is, where it's just looking at the facts, like, okay, are my fears…is there some disconnect here that I can help. Just educationally. Maybe there's an education that can help.
Bridget: Right.
John: A combination of those two things, I think makes a ton of sense. And I think that's a great place to wrap up here.
Bridget: The other thing is aspire to being happier when you're retired. I mean, actually, a lot of people find great meaning and happiness when they're retired and older, and that is not necessarily based on your income. So, if you can get past this stuff, you can be happier. So that's my attempt to give a little bit of a motivational message.
John: Right, identify what makes you happy and it often doesn’t have to do with money.
Bridget: Alright, so wrapping it up, we’ve got two things to say. We're both members of ACP, or the Alliance of Comprehensive Planners, which is a non for profit organization that has planners all over the country that think a lot like we do. The other thing is Subscribe; hit the Subscribe button, that helps us with YouTube and helps us get the word out and helps you get notified when we have more assets. So with that, I think I'll wrap it up. Thanks John.
John: Alright. Thanks, Bridget.
At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.