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Financial Tips for the LGBTQ+ Community

Financial Tips for the LGBTQ+ Community

| April 04, 2024

Over the years, there have been financial limitations in the LGBTQ+ communities because of economic and legal disparities. Many in this demographic lack family support, experience workplace discrimination and have little access to educational avenues tailored to their unique financial needs.

Despite LGBTQ+ rights evolving over the past 50 years, with recent gains in marriage and workplace protections, the community still feels the impact of decades of biases against them.

Marriage and Family Planning

Marriage

The Marriage Equality Act, ratified in 2015, gave access to financial benefits for same-sex couples, like spousal inheritance rights and spousal Social Security benefits.

Family Planning

LGBTQ+ individuals encounter significant financial hindrances in family planning. Across income levels, 45% to 53% of LGBTQ+ millennials aim to become parents or expand their families regardless of their income bracket. However, aside from the high cost of raising children, the LGBTQ+ community has to grapple with substantial expenses.

Adoption costs between $30,000-$50,000, while surrogacy varies from $100,000-$225,000. IVF averages $15,000-$30,000, plus $25,000-$30,000 for egg donors. Grants, insurance, and employee benefits may alleviate costs, but financial planning is crucial to prevent debt accumulation.

Ensuring a Comfortable Retirement

Despite recent progress in LGBTQ+ rights, many LGBTQ+ individuals nearing retirement age have faced years of discrimination in the personal, professional, and financial realms, interfering with their preparedness for retirement.

This demographic also has lower average incomes compared to their heterosexual counterparts, with 42% of LGBTQ+ older adults fearing they will outlive their retirement savings. Like many Americans, the LGBTQ+ community also encounters a retirement savings gap.

Here are some tips to close that retirement savings gap

  • Save early to leverage the power of compounding.
  • Maximize your 401(k) contributions, taking advantage of employer matching.
  • If you are over 50, consider using IRAs and catch-up contributions.
  • Downsize your living standards to reduce expenses.
  • Delay retirement to prolong your earning period.

Setting Up an Estate Plan

Create an estate plan to protect your intentions after death and grant decision-making authority to your partner, regardless of marital status. You can also designate a non-legally married partner as your heir, decide guardianship for your children, ensure your assets go to chosen beneficiaries, and facilitate property sale in case of untimely death.

There is also provision for planning for non-biological adoptions or managing family dynamics. Ensure your plan adheres to your state laws.

Five Key Estate Planning Documents

A Will

A will dictates your assets and possessions distribution upon death. It also names a personal representative to execute instructions and appoint a guardian for minor children. It becomes effective after death and admission to probate. Without a will, state decisions would govern asset distribution.

Health Care Power of Attorney or Proxy

Assign someone familiar and trustworthy to make health decisions when you’re incapacitated. This ensures your wishes are followed with regards toward medical care in situations where you can't speak for yourself.

Durable Financial Power of Attorney

Choose a trusted individual familiar with your financial philosophies to make financial decisions if you become incapacitated. This empowers someone you trust to manage your finances if you're unable to do so.

Living Will

Write a living will to provide clear instructions on desired medical treatment when you cannot communicate your wishes. A living will is a legal document that expresses your preferences for life-sustaining treatments.

HIPAA Release Form

Federal law now safeguards healthcare information, making it challenging for family or trusted individuals to manage health insurance matters during incapacitation.

Complete the Health Insurance Portability and Accountability Act (HIPAA) release form in advance to grant named individuals in your advanced healthcare directive and power of attorney access to healthcare information, enabling them to handle insurance matters on your behalf when you’re incapable.

Document Your Wishes

Create a document with your wishes for peace of mind and clarity for loved ones. Ensure someone trusted can easily access the document when needed. Check if your employer offers a prepaid legal plan to access document creation services.

Plan Your Digital Assets

Cryptocurrency and NFT investments require access to digital wallets. Managing accounts on platforms like Venmo and social media sites can be challenging. Strong passwords further complicate access.

Designate a digital fiduciary in your estate plan to allow access to your digital information. Work with an attorney to develop a comprehensive plan, including shutting down your online presence on social platforms (Facebook, TikTok, etc.) and other online accounts you may frequent.

Preparing for Long-Term Care

Even in the post-marriage and equality era, finding LGBTQ+-friendly long-term care remains challenging, with disparities in availability and pricing. Despite the Fair Housing Act, no federal law explicitly protects LGBTQ+ individuals. Over a third of lesbian, gay, or bisexual respondents worry about concealing their identity for suitable assisted living.

Moreover, 54% of hospice providers believe LGBTQ+ seniors face discrimination, with 24% witnessing it firsthand. Eldercare facilities are also often religiously affiliated, adding concern to LGBTQ+ seniors. With fewer familial support options, many opt for at-home elder care or choose to research elder-affirming facilities to mitigate discrimination risks.

Open a healthcare savings account or get insurance policies that cover long-term care during retirement. Traditional long-term care insurance or hybrid products combining long-term care funding with life insurance or annuities can help cover long-term care expenses.

You can always leverage the expertise of a financial professional from the SKG Team for custom solutions. 

CRN202507-6264190