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Retirement Planning Tips for LGBTQIA+ Community

By Robert DiGiacomo

  • PUBLISHED January 23
  • |
  • 6 MINUTE READ

The LGBTQIA+ community faces unique challenges when planning for retirement.

More than 50% of middle-income LGBTQIA+ people say they aren't confident they will sock away sufficient funds for a comfortable retirement, compared to 29% of their straight counterparts, according to the Employee Benefit Research Institute's retirement confidence survey.1 There's also a retirement savings gap between straight Americans and LGBTQIA+ people, who are less apt to have saved $250,000 or more for retirement, across various income groups.1

Concerns Over Discrimination

Even if LGBTQIA+ people have prepared adequately for retirement, they may encounter difficulties with arranging eldercare if they don't have a spouse, partner or children and/or experience discrimination in long-term care facilities or retirement communities.

According to the Long-Term Care Equality Index, 50% of LGBTQIA+ elders in the U.S. live in a state where it's legal to deny them access to housing and public accommodations.2 An AARP report also found that more than six in 10 are worried about the treatment they would receive in long-term care, and just over one in three worry they will have to shield their LGBTQIA+ identity to get senior housing.2

For these reasons, it's especially important for LGBTQIA+ people to start early with their retirement planning and look for resources tailored to their needs. Here are some things for LGBTQIA+ people to consider to aid in their retirement planning.

Catching Up on Retirement Savings

With LGBTQIA+ workers bringing home about 90 cents for each dollar made by the average worker—and more apt to work part-time or under contract—they may need to be even more deliberate about saving for retirement to maximize their contributions.3 That could mean thinking beyond a traditional IRA to open a solo 401(k), SIMPLE IRA or SEP IRA.4

Those who are employees and are participating in a retirement plan connected to their job may want to go beyond their employee contribution and stash away additional funds in other savings vehicles, including high yield savings accounts, money market accounts and certificates of deposit (CDs), which typically offer higher interest rates than regular savings or checking accounts.

Different "Sandwich Generation"

Much has been written about the "sandwich generation," who are typically middle-aged people caring for elderly parents or other family members while also being responsible for adult children at home. For many LGBTQIA+ people, a similar situation exists: They are less likely to be married and/or parents, and are therefore more likely to care for their elderly parents or other "chosen family."5

According to the 2023 Retirement Confidence Survey, caregivers are more apt to have debt issues and fewer financial assets than non-caregivers—more than one in three caregiving retirees saying they help support the person for whom they are caring.6 Speaking further to the impact of caregiving on retirement finances, more than three in 10 retirees who are caregivers believe their lifestyle is not as good as they anticipated, compared to just one in five retirees who aren't caregivers.6

This role of LGBTQIA+ caregiver may seem at odds with the social construct of a female caregiver (who is often the focus of caregiver programs).7 The WellMed Charitable Foundation has created an annual Pride of Caring webinar, as well as other resources, to provide support for LGBTQIA+ caregivers.5

Eldercare Challenges

Planning for your eldercare, whether that means aging in place or moving to a retirement community, is a critical component of retirement planning for most people. Yet it poses an added layer of complexity for LGBTQIA+ people: how to choose services or a community that will treat them with dignity and respect, especially if they don't have a spouse, life partner or other family to advocate for them.

Just under one in five long-term care communities with residential non-discrimination policies include LGBTQ protections, and just over one in three with employee non-discrimination policies include LGBTQ protections, according to the Long-Term Care Equality Index.2

As of 2021, nearly 80 communities have made a "Commitment to Caring," which reflects their goal to enact LGBTQ inclusive and culturally competent policies and practices. Additionally, more than 180 long-term care communities in 32 states have completed self-assessments as a step toward becoming fully inclusive.2

Given uncertainties over protections for LGBTQIA+ people, it's even more important to create estate planning documents, including wills, trusts, powers of attorney and healthcare directives, as part of your retirement planning.8

Finding LGBTQIA+ Friendly Communities

Location, location, location is a truism in real estate, and it applies directly to inclusive senior housing options available to LGBTQIA+ people. Federal law does not provide non-discrimination protections for LGBTQIA+ people living in market-rate housing, although a 2021 executive order from President Biden applies certain Fair Housing Act protections to include discrimination based on actual or perceived sexual orientation or gender identity for those who live in federally funded housing.9

At the state level, 31 states offer some form of explicit or interpreted non-discrimination protections based on sexual orientation and gender identity, while 19 states—including popular retirement destinations like Arizona, North Carolina and South Carolina—offer no explicit protections.10

For LGBTQIA+ people considering whether—and where—to move for their retirement, understanding the status of their rights in a particular location could prove a key decider.

What's Your Comfort Zone?

Some seniors who are evaluating LGBTQIA+ retirement community options may opt for an inclusive city, such as Charleston, South Carolina, or Asheville, North Carolina, which scores well for climate, healthcare and quality and cost of living, but is located in a less LGBTQIA+ welcoming state.11

Others may prefer places like Portland, Oregon, or San Francisco, California, where the cost of living is higher but state and local laws offer non-discrimination protections.11 This could impact budgetary decisions, requiring the allocation of a greater percentage of retirement income toward housing and everyday expenses, and less toward travel, restaurants, cultural events and other discretionary expenses.

Whether or not a state is officially welcoming, you may find retirement communities with LGBTQIA+ friendly policies, although those types of communities are more common in states with a higher cost of living like Massachusetts, California and New York.

Ensuring a Smooth Retirement

With so many variables impacting retirement for LGBTQIA+ people, it's even more important to seek to protect your interests and those of your loved ones, including:4

  • • Long-term care insurance: This type of coverage can provide for in-home care, as well as an assisted living or skilled nursing facility. Another option is a hybrid insurance policy with a long-term care rider. This allows you to tap a portion of the death benefit for your care, and for your beneficiaries to receive any benefits you don't use.
  •  
  • • Estate planning: With LGBTQIA+ people less likely to wed, an estate plan helps ensure their wishes are carried out.
  •  
  • • Financial planning: Have you considered working with a financial planner, but wondered where to find one who will understand your situation? Organizations that identify LGBTQIA+ supportive professionals include the National LGBT Chamber of Commerce and the Financial Planning Association.

It's Never Too Soon To Start Planning

Remember that it's never too soon to take proactive steps to help ensure you can enjoy retirement on your own terms—and with peace of mind. This is especially true for LGBTQIA+ people, who face unique challenges to reaching their retirement goals.

 

Robert DiGiacomo is a Philadelphia-based writer specializing in personal finance, arts and entertainment, LGBTQIA+ topics, technology, travel, food and books.

 

READ MORE: LGBTQIA+ Estate Planning: Helping Families, Protecting Rights

 

 

Sources/references

1. Reinicke, Carmen. LGBTQ+ Americans are less confident than straight peers when it comes to saving for retirement. CNBC. Published June 30, 2022.

2. Long-Term Care Equality Index 2021. SAGE and the Human Rights Campaign Foundation.

3. Migdon, Brooke. US LGBTQ+ workers earn 90 cents on the dollar: report. The Hill. Published January 19, 2022.

4. Ashford, Kate. 4 LGBTQ+ Retirement Hurdles (and What to Do About Them). NerdWallet. Published August 14, 2023.

5. Montgomery Sklar, Elliot. How is Caregiving Different for Members of the LGBTQ+ Community? Next Avenue. Published September 29, 2023.

6. Copeland, Craig and Greenwald, Lisa. Caregivers and Retirement: Findings From the 2023 Retirement Confidence Survey. Employee Benefit Research Institute. Published July 13, 2023.

7. Caregiving in the U.S. 2020. The National Alliance for Caregiving and AARP.

8. McNair, Kamaron. Take 3 steps to protect your assets if you're LGBTQ, say experts: This is 'our first recommendation to every couple'. CNBC. Updated June 29, 2023.

9. Housing Discrimination and Persons Identifying as Lesbian, Gay, Bisexual, Transgender, and/or Queer/Questioning (LGBTQ). U.S. Department of Housing and Urban Development. Updated February 1, 2022.

10. Nondiscrimination Laws. Movement Advancement Project. Updated November 1, 2023.

11. Sherman, Emily. 8 Best Retirement Destinations for LGBTQ Seniors. U.S. News & World Report. Published June 20, 2023.