According to a survey by Wells Fargo, the average LGBT retiree has saved $450,000, compared with $350,000 for a national sample of retirees. However, the average national retiree thinks he or she needs a median of $500,000 in savings, whereas LGBT retirees believe they will need $800,000.
LGBT investors, the survey found, are more optimistic about reaching their savings goal than the national sample (61% versus 53%), but an equal share expects to be working during their retirement years (36% versus 41%).
“Clients within the LGBT community tend to be higher earners and tend to be more career-oriented [Ed. note: not according to a recent Gallup poll],” Kyle Young, a certified financial planner with Wells Fargo who advises LGBT clients, told MSN. With smaller families, often a partner without any children, “they can concentrate more on advanced degrees and on their careers.”
Conversely, not having a large family support structure may expose older LGBT retirees to higher caregiving costs and require them to be more financially self-reliant.
“We don’t have the extended-family network to depend upon for later-life care,” Young said.
Further complicating maters are the legal rights available to heterosexual married couples otherwise denied to same-sex couples, thus raising major estate, pension, tax and property-ownership questions. In spite of this, the Wells Fargo survey found that LGBT support for legalizing same-sex marriage was based mostly on a desire for equal rights rather than financial and tax parity.
Recognizing that LGBT individuals face special financial problems, Young began working with the College for Financial Planning several years ago on specialized education for financial advisers dealing with LGBT clients. Advisers can now earn an accredited domestic partnership adviser designation, which Young estimated has been awarded to about 150 financial planners throughout the country.
“For gay couples,” he said, “one of the easiest and most cost-effective ways to deal with estate liabilities is to purchase life insurance.” Since many states have both a state-level estate tax and a state inheritance tax, Young warned that it’s “important for LGBT couples to be aware of state tax rules.”