LGBTQ workers and retirement: Problems and solutions

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on Jun 12, 2018

Working Americans and families who identify as LGBTQ may be less prepared for retirement and more worried about their finances than the general population, recent data suggest. However, they are also in a position to overcome the challenges and take control of their financial future through early education and action. 

"The traditional reasons why working adults are motivated to save, including marriage, buying a home, raising kids, and saving for retirement, were once restricted and much more difficult for LGBTQ couples," said Steve Branton, a financial advisor with Mosaic Financial Partners in San Francisco, California, who works closely with the LGBTQ community. "Now that this is mostly equalized, younger gay couples who hope to reach their financial goals in the same way as their straight counterparts" should educate themselves about the importance of saving and make regular contributions to their retirement accounts a top priority, he said. 

Similiarly, he said, older LGBTQ workers who faced more challenges in their ability to save can still make smart saving and spending choices now that can potentially help them make up for lost time.  

The numbers: Challenges and goals

An online survey of more than 500 middle-income Americans conducted by Greenwald & Associates on behalf of MassMutual found that 47 percent of LGBTQ workers between the ages of 25 and 65 felt either “not very” or “not at all” financially secure, compared with 37 percent of their non-LGBTQ peers.1

Some 40 percent of LGBTQ respondents said they worried about their finances either daily or multiple times per week, compared with 29 percent of the general population.

Additionally, when it comes to retirement preparedness, 70 percent of LGBTQ workers said that their savings fell short of their goal, compared with 63 percent of non-LGBTQ respondents.

The savings disparity may be greater still for older LGBTQ adults.

According to a 2014 survey from SAGE, a nonprofit group that advocates for LGBTQ elders, 42 percent of LGBTQ individuals between the ages of 45 and 75 were “very” or “extremely” concerned that they will outlive their savings, compared with 25 percent of non-LGBTQ people.2 

 Learn more and take control: Crafting a savings plan

The SAGE survey also found that 44 percent of older LGBTQ people are “very” or “extremely" concerned that they will have to work well beyond their retirement age in order to supplement their savings, compared with 26 percent of non-LGBTQ people. 

That’s not surprising, said Jerry Chasen, SAGE director of legacy planning, in an interview.

“Older LGBTQ people are coming from decades of discrimination in employment, in opportunity, and in financial guidance,” he said, noting that most spent the bulk of their working careers earning less than their non-LGBTQ peers. “The generation that is currently old are the people who have been at the forefront of the LGBT struggle for equality. As they age, once again and sadly, they are still the ones on the front lines of this challenge.”

Earnings gap

Still today, workplace discrimination for the LGBTQ community remains a challenge.

There is no federal nondiscrimination protection in place specifically on the basis of sexual orientation or gender identity, and state laws vary widely. In 28 states, according to LGBTQ advocacy group Out & Equal, you can still get fired simply for being lesbian, bisexual, or gay. And in 30 states, you can be fired for being transgender.

One in four LGBTQ employees report experiencing employment discrimination in the last five years and nearly one in 10 report having left a job because the environment was unwelcoming. Among the transgender population, the unemployment rate is three times higher than the national average.3

While the income gap is disappearing for LGBTQ working men with comparable education, experience, and job profile, it persists for workers who identify as lesbian. This limits their ability to save and maximize employer matching benefits, said Jennifer Hatch, a financial advisor and owner of Christopher Street Financial in New York, which caters to LGBTQ clients.

 Learn more: Setting income goals

In its most recent analysis of data from the Federal Reserve’s Survey of Consumer Finances, the Associated Press-NORC Center for Public Affairs Research confirmed that same-sex couples who have retirement accounts report lower total account values than different-sex married couples, according to Jennifer Benz, the group’s principal research scientist. The study found the median value for same-sex couples is roughly $66,000 compared with $88,000 for different-sex married couples. (Know your number? Retirement savings calculator)

“The income gap is certainly a factor,” said Hatch. “And it’s compounded for women. Gay women are at the bottom of the earnings scale, and that’s a double whammy when you’re trying to fund your own retirement.”

An aging support network

Another vulnerability that impacts retirement security for older LGBTQ adults is the lack of available caretakers, said Chasen, noting that members of the LGBTQ community are three to four times less likely to have children than the general population.

“In American society, the default caretaker in an aging situation is the child,” he said. “As a community, we have always prided ourselves on creating our ‘families of choice’ and those have proven to be incredibly resilient and satisfying, but those families are often of the same generation, which means that when we reach out for help as we age, that person might be reaching out to us.”

Ironically, the growing social support and acceptance for the LGBTQ community may help reinforce those generational silos.(Learn more: The changing notion of dependents)

“In the past, when we experienced outright legal discrimination and the horror of the AIDS years, those were circumstances that demanded and created those relationships,” said Chasen. “But at this point, we’re not in a horrible crisis. We don’t have that same urgency, so one thing we are looking at as an organization is how do we make sure those relationships and connections still happen?”

LGBTQ individuals who choose not to have children, he said, should cultivate a healthy social network that includes nieces and nephews, colleagues, and younger friends who can potentially provide transportation and support as they age. Such relationships could delay or prevent the need for costly home health care services or assisted living down the road.

The health disparity

Another risk factor facing LGBTQ adults, which negatively affects their financial security, is poor relative health.

The National LGBT Health Education Center reports that the LGBTQ population has higher rates of substance abuse, smoking, depression, and unhealthy weight control/perception. The group also has lower rates of mammography and other preventive screenings.4

 “There is a long history of anti-LGBT bias in health care that continues to affect health-seeking behavior and access to care for LGBT individuals,” the Center writes in its report, noting that homosexuality was listed as a disorder as recently as 1973 and transgender identity still is. LGBTQ adults are more likely to avoid well visits and treatment for early-stage health problems, for fear they will not receive culturally competent care. That, in turn, leads to costly chronic conditions. (Lean more: Improving your healthcare)

Indeed, SAGE reports that 43 percent of older LGBTQ people who are single and 40 percent of older LGBTQ people in their 60s and 70s said that their health care providers do not know their sexual orientation, and 65 percent of transgender adults felt that there will be limited access to health care providers as they grow older.

Hatch said poor health negatively affects the ability of working adults, regardless of gender or sexual identity, to maintain employment and save for the future.

“I think that if you take any marginalized community, there is more depression and self-medication through drugs and alcohol,” said Hatch. “It’s a big challenge.”

Americans are notorious for undersaving, but LGBTQ working adults face far bigger roadblocks to financial security. Thus, they are less prepared than the general population to cover their living expenses in retirement.

By cultivating a social support network, however, and seeking financial advice and health care from culturally competent sources, the LGBTQ community can help reduce a significant source of worry and better provide for their financial needs as they age.

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Greenwald & Associates, “MassMutual LGBTQ Financial Security Study,” July 2017.

SAGE, “Out and Visible: The Experiences and Attitudes of Lesbian, Gay, Bisexual and Transgender (LGBT) Older Adults, Ages 45-75,” Oct. 6, 2014.

Out & Equal, “2017 Workplace Equality Fact Sheet,” 2017.

National LGBT Health Education Center, “Understanding the Health Needs of LGBT People,” March 2016.

The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, its employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of MassMutual.