Anyone who imagined that last year’s Supreme Court decision that legalized same-sex marriage across the United States would somehow cure all of that community’s ills should be disabused of that notion by recent news about the group’s finances. Yes, The High Court invalidated laws that denied marriage eligibility to same-sex couples, and thereby paved the way for more than a hundred thousand LGBT couples to wed. And yes, members of that community were elated at the decision. However, there are still important issues that need to be addressed. According to a recent survey from Prudential Financial, one of those issues would appear to be the current state of their finances.
A Community in Financial Crisis?
In that report, the 2016 LGBT Financial Experience, a number of surprising findings came to light. Overall, surveyed members of the community revealed that the percentage of them whose financial situation has deteriorated over the last four years has risen sharply. The survey was last conducted in 2012, and those who considered themselves to be struggling with their finances then amounted to 31% of respondents. In this survey, that number has increased to 41%. That is markedly higher than the 2012 results, and disproportionately high when compared to the rest of the population.
Among that group were many who noted that it has become more difficult to keep pace with rising costs. That has resulted in a struggle just to pay the bills, which naturally results in a loss of confidence in their financial future. Many noted that they would be willing to work with financial advisers, but would only do so if the company they selected was supportive of LGBT rights.
To add to that sobering reality, the study also discovered that LGBT individuals are apparently carrying even larger levels of debt than they were carrying in 2012, with those who said that they now have debt in excess of $50,000 climbing from 19% to 21%. That is in keeping with the survey’s finding that many in the community define themselves as spenders rather than savers. Almost half of those surveyed – 48% – reported that they were more likely to spend money than save it (only 32% referred to themselves as savers). That is problematic for long-term financial planning and retirement strategies, and those problems are clearly manifested when the LGBT community’s ownership of retirement and long-term financial products are viewed in comparison to the rest of the population:
- Only 40% of LGBT individuals reported owning any type of savings account. That includes higher-interest instruments like CDs, as well as money market accounts, etc. That’s seven percentage points lower than that seen among the rest of the population.
- A mere 42% own life insurance policies, compared to 54% of the broader population.
- In the general population, 30% of individuals have an IRA that is apart from employer-sponsored accounts. Only 18% of LGBT community members own such accounts.
- Similar results are seen when comparing things like mutual fund ownership, long-term care insurance, and even stocks.
The one bright spot in the numbers is found in the two-point advantage the community seems to have in the area of disability insurance. Sadly, however, even that one area of success is minimized by the fact that fewer than one in five LGBT people actually has disability coverage. Even more distressing is the fact that the percentage of respondents who have made out a Last Will and Testament or engaged in other estate planning is also stuck at a mere 19%.
Why the Poor Performance?
The study apparently identified a number of barriers that it considered institutional in nature. For example, it referenced other past reports which suggest LGBT workers are paid less than their straight counterparts, as well as legal disparities that still exist in certain states that can make employment an unequal proposition. Difference in incomes between gay and heterosexual workers is naturally included among those barriers.
In addition to those institutional factors, general distress in the economy was also cited as a reason for the financial gloom that has settled over much of this community. Unemployment was cited as a major factor in many LGBT individuals’ feelings about their own financial wellbeing, with issues like inflation and debt being important concerns as well.
Of course, planning for LGBT couples can be even more daunting, since their circumstances often differ in dramatic ways from those in which heterosexuals find themselves. LGBT individuals still tend to marry at later ages than many straight people, and that can cause them to have dramatically different planning needs than younger straight or gay people. Since gay marriage is a fairly recent phenomenon, many LGBT couples have not had the advantages afforded to them by competent estate planning experts who could have helped them better prepare their finances to endure economic turmoil or unforeseen calamity.
Estate Planning is Essential
The fact is that members of the LGBT community have an opportunity now that many of them were denied for many years. While the economic disruptions of recent years have left many on unsure financial ground, one of the best ways for them to regain their footing and enjoy more control over their financial destiny is to begin comprehensive estate planning as soon as possible. The truly good news about that is that there are now estate planning attorneys whose practices encompass strategies that have been designed with this vibrant community in mind.
As this survey makes clear, sound financial and estate planning should be of major importance to everyone in the LGBT community. At the Law Offices of Mary A. Miller, P.C., our legal team has experience dealing with all of the important financial and legacy issues that gay Americans care about, and can work with you to help ensure that your comprehensive LGBT estate planning protects your interests both during your life and after you’re gone. If you would like to know more about how we can help you to safeguard your estate and prevent any type of discrimination during periods of incapacity or even after your death, contact us online or call (914) 939-6565 now.