Opinion: How LGBTQ Investors Can Benefit From Marriage, Money, Family, and Retirement


The LGBTQ + community may be underestimated by the financial services industry, but many facets of this community are unique in terms of financial planning needs. That’s why it’s especially important to understand the many financial complexities that LGBTQ + people can face.

Experian’s research shows that the majority (62%) of LGBTQ + people report having encountered financial difficulties because of their gender identity or orientation, while almost half (44%) report having difficulty saving money. money and only 11% save for retirement each month. Meanwhile, the Human Rights Campaign Foundation also found that LGBTQ people are more likely than the general population to think their personal finances are worse now than they were a year ago. Yet a 2021 E * TRADE survey also found that more than two in five LGBTQ investors (43%) plan to leave nothing to their portfolios in the next six months.

How can LGBTQ + people flourish financially? One way to take control of your financial well-being is to consider your relationship, family planning, and retirement choices.

Tie the knot

Marriage isn’t everyone’s goal, but Pew Research has found that a majority of cohabiting same-sex couples have married since 2017. When LGBTQ + couples decide to marry, it’s important to understand how marriage affects issues such as eligibility for benefits, inheritance planning and giving strategies, adoption and family planning, income reporting, health care coverage, social security benefits at spouse and spousal pension plan benefits.

It may be a good idea to consult a tax advisor about your particular situation. For example, newly married couples who file a joint tax return can benefit from deductions and exclusions that lower their tax bill, or they can benefit from a tax increase known as a “marriage penalty” if their combined income makes them less expensive. put in a higher tax bracket. And when it comes to estate planning, married couples can take advantage of the portability of US federal estate tax.

Some couples have considered other ways to help protect their inheritance and loved ones, such as a domestic partnership or cohabitation agreement. Although the law does not recognize domestic partners as family members, some workplaces and businesses do, check with your employer. Rules on domestic partnerships and civil unions vary by state, but the IRS requires domestic partners to report their taxes individually – and if there are children, you’ll need to check your local laws to determine if you’re eligible for deductions. State laws can also determine whether you can extend health care coverage or community property to a partner, and estate planning will be different from a marriage.

Likewise, a cohabitation agreement can formalize partnerships and can also offer some leeway to customize your legal arrangements while also covering standard elements such as establishing a financial basis and detailing how your assets. , your debts and your children will be taken care of in the event of separation.

Building modern families

Building an LGBTQ + family can be complex. The status of your relationship and where you live can affect your choices, but fostering, adoption, assisted reproduction, and surrogacy all come with unique legal and financial considerations.

Adoptions can be national or international, open or closed, and with public or private agencies. Prospective parents have to juggle issues of tax credits, legal agreements, and money. The Balance estimates the average cost of adoption fees to be around $ 40,000. Yet assisted reproduction by cryopreservation, in vitro fertilization and surrogacy can be even more expensive at $ 60,000 to $ 150,000, according to Surrogate.com.

LGBTQ + families will also want to budget for legal services to help them navigate the adoption or assisted reproduction process. Laws will again vary from state to state, and unmarried co-parents may not automatically enjoy the same rights as married parents. There is a lot to think about and work on, but it is doable with the right support system.

Unique financial planning needs

Saving for retirement is a challenge for many of us, but the LGBTQ + community faces unique considerations. As Forbes Advisor notes, discrimination and inequality have negatively impacted the ability of many LGBTQ + retirees to save for retirement. But things are looking up: In a 2021 E * TRADE study, more than four in five LGBTQ investors (87%) said they were confident they were saving enough to enjoy the retirement they wanted.

It is essential to start planning for retirement as early as possible. Think about when you want to retire, who you want to support, and what your ideal retirement situation might look like. It’s also helpful to contact a financial advisor to determine how much you’ll need to save: In 2020, the national average monthly cost for a private room in a nursing home was $ 8,121, according to RetirementLiving. Resources such as gay and lesbian medical associations or the National Registry of Psychological Health Service Providers can also help identify LGBTQ-friendly care providers.

In addition to financial preparation, it is important to gather important legal documents, such as establishing a health care attorney or health care guidelines. It is also worth considering the possibility of providing long-term care for a loved one. The AARP reported that 28% of family caregivers stop saving, 23% take on more debt and 22% use their personal short-term savings. If you think you will have caregiving responsibilities, start the conversation early.

Be proud of financial well-being

Pride Month began with an uprising against discrimination in Stonewall, while Pride Month 2020 ushered in a landmark Supreme Court ruling banning employment discrimination on the basis of sexual orientation or gender. transgender status. Yet even with federal protections, Forbes Advisor notes that systemic forces and life milestones can still have a significant impact on the financial well-being of LGBTQ + people today.

As Pride Month celebrates the historic twists, turns and triumphs that the LGBTQ + community has achieved on the road to where we are today, it is also a precious time to advocate for important next steps that can help bring our community even more equality, opportunity and well-being — starting with your own portfolio.

Jon Jensen is Executive Director of Product Management and D&I Committee Member, Morgan Stanley at Work.

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