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Lack of Social Security survivor benefits and spousal tax exemptions are major concerns
A new study reveals concerns by lesbian, gay, bisexual and transgender (LGBT) Americans regarding retirement savings and equality of financial rights.
In August 2012, financial services firm Prudential surveyed a diverse group of 1,401 LGBT respondents from urban, suburban and rural communities throughout the U.S. The firm's November 2012 survey report, The LGBT Financial Experience,highlighted how issues involving the legal status of LGBT relationships can have a significant impact on retirement planning.
Retirement was the top financial concern in the LGBT community, and retirement planning will be among the major financial issues facing LGBT employees over the next decade, the report noted. Like most Americans, LGBT respondents indicated a significant confidence gap in whether they will have enough money in retirement to last a lifetime.
In addition, “The LGBT community faces a number of unique challenges when it comes to financial planning,” said Sharon Taylor, senior vice president, human resources, at Prudential.
For instance, LGBT respondents reported being very concerned about the lack of Social Security or pension survivor benefits for same-sex couples, as well as legislation that negatively affects LGBT rights. Tax treatment, benefit inequality and inheritance rules for same-sex couples closely followed as major issues.
The federal Defense of Marriage Act (DOMA), in particular, prevents access to federally tax-exempt spousal health care coverage and other benefits provided to married couples.
As a result, financial planning for LGBT couples and parents can be complex, requiring maneuvering through widely varying state laws that govern relationship status and adoption, according to the report.
Many LGBT Baby Boomers also indicated challenges specific to being an LGBT person of that generation. For example, some discussed facing a lifetime of employment discrimination that has suppressed their savings potential.
LGBT Parents Have Added Expenses
The number of LGBT parents continues to grow and is expected to increase significantly, according to the report. Many LGBT parents said they needed to spend significant household income on legal and financial protections for their families because of the lack of legal protections in most states, and many expressed concerns about the financial industry’s attention to their needs.
Income Distinctions by Gender
In other survey findings, gay men reported earning more than lesbians individually ($49,000 vs. $43,500 median personal income), but when it comes to household income, lesbians, who are more likely to live in dual-income households, had higher household income ($63,700 vs. $62,300). While the combined household income of gay male couples is the highest overall at $103,000, these couples constitute a minority (19 percent) of the LGBT community.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Articles:
Workers Committed to Saving for Retirement, but Less Confident, SHRM Online Benefits, November 2012
Defense of Marriage Act Ruling Has Benefits Implications, SHRM Online Legal Issues, October 2012
Gay Partners Get Some Caretaking Leave, SHRM Online Legal Issues, March 2012
‘Big Four’ Firm Provides Tax Gross-Up Benefit to LGBT Employees, SHRM Online Benefits, January 2012
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