Four tips for LGBTQ+ retirement planning

LGBTQ+ individuals and same-sex couples face unique challenges when it comes to financial planning. Here are some strategies to secure your Financial future.

Pride Month is here. It’s a time to celebrate the progress made towards equality and bring awareness to the current obstacles facing the LGBTQ+ community.

Despite major victories for marriage equality, family planning and workplace discrimination in recent years, LGBTQ+ individuals still face many unique challenges and disparities when it comes to financial and estate planning.

Nearly half of LGBTQ+ individuals fear they will outlive the money they saved for retirement compared with just a quarter of non-LGBTQ+ people. This is unsurprising, as LGBTQ+ retirees are less likely to have a will or estate plan, and employer-sponsored retirement accounts than their heterosexual counterparts. And, even when they do have retirement accounts, they fall behind heterosexuals by 25%, according to an analysis of the Federal Reserve’s Survey of Consumer Finances by the AP-NORC Center for Public Affairs Research.

While both communities share similar retirement aspirations, differences in family circumstances, workplace discrimination and health issues lead to greater vulnerability among the LGBTQ+ community. The Alliance for Lifetime Income recognizes its role in supporting healthy aging and long-term financial security for all Americans and believes annuities can be an important part of the solution.
Here are four financial steps you can take today to help prepare for the future.

  • Plan ahead: Start saving for retirement as early as possible and accumulate retirement savings through an employer-sponsored retirement account, such as a 401(k) or IRA, if available. Establish a healthy financial plan and clear goals to ensure you won’t outlive your resources. If partnered, consider scheduling money dates, or check-ins, with your spouse to align your collective financial goals. As retirement approaches, “Check Off The Basics” is a simple approach you can use to ensure you have the protected income you need to cover your essential monthly expenses. If you’re not sure where to start, contact a professional financial adviser. There are several digital financial platforms that offer recommendations for LGBTQ+-friendly financial advisors, including SAGECents and PridePlanners.
  • Deal with your debt: Collectively, the LGBTQ+ community reports dealing with higher levels of debt than the rest of the population. Soon-to-be retirees should prioritize paying off high-rate debt, like high interest credit cards and student loans, as fast as possible, and set up a clear repayment plan.
  • Talk with your parents about money early and often: LGBTQ+ workers are more likely to expect to provide support to aging parents in their own retirement (22%), compared to just 15% of heterosexuals, according to Transamerica. Have a candid conversation with your parents about their financial situation and be clear about your financial abilities and limitations. Knowing their retirement plan can also provide clarity and offer a glimpse of any potential gaps or help they might need in the future.
  • Set aside dedicated savings for long-term care: While many in the LGBTQ community may be faced with caring for their parents, some may not have children and lack the same type of care as they age. They are also more likely to be estranged from family members or help provide care for their friends as they age. An income annuity is a cost-effective way to guarantee income for life and combat risk. It can also help supplement other sources of guaranteed income, such as a 401(k) and Social Security.

For more information about how to prepare for and protect your financial security in retirement, watch the Your Money Map conversation with Jean Chatzky and John Schmidt, an investing and retirement editor at Forbes Advisor, on the Alliance for Lifetime Income Facebook page.

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