About 47 percent of millennials between the ages of 25 and 37 identify as lesbian, gay, bisexual and transgendered (LGBT) compared to 24 percent of boomers and 28 percent of Gen Xers, according to Prudential’s 2016/2017 LGBT Financial Experience study.
“The increase in the number of LGBT couples who have married in the past four years is a surprising change, along with the strong prevalence of millennials who identify as LGBT,” said Kent Sluyter, CEO of Individual Life Insurance and Prudential Advisors.
Of the millennial LGBT respondents, 64 percent identify as bisexual compared to 20 percent gay and 15 percent lesbian.
“Financial advisors can assist by helping them to understand beneficiary rights and what options are available now through Social Security and pension benefits,” Sluyter said.
Sluyter spoke on a June 23 panel at the LGBT Community Center in Manhattan, where Prudential released findings from its study.
“There is a learning curve because financial planning in a marriage equality world is new to much of the LGBT community nationwide,” Sluyter said.
Lesbians and bisexuals, in particular, skew young with 45 percent of lesbian and 58 percent of bisexual respondents claiming they are millennials.
“LGBT couples are comfortable with financial advisors who are not necessarily LGBT as long as they are sensitive to the LGBT plight,” Sluyter said following the discussion.
About 46 percent of the LGBT respondents said the financial needs of the LGBT community are the same as for the general population. But 45 percent said they must follow a different path to meet those same needs.
How LGBT couples define their relationship determines the strategy, said Kenneth Krohn, an estate planning attorney with Ford + Bergner, a boutique law firm in Houston.
“LBGT couples must define whether they have entered into an informal or common law marriage, what community property or separate property issues may exist, and what estate planning protections they need to implement to adequately protect themselves, such as powers of attorney, payable on death designations, wills, trusts and guardianships,” Krohn said.
Same-sex marriage has been legal in the United States since June 26, 2015, when the Supreme Court ruled state-level bans unconstitutional.
About 30 percent of LGBT couples are now married compared to 8 percent in 2012; 25 percent of lesbian women married in 2016, compared to 9 percent in 2012; 17 percent of gay men married in 2016 compared to 6 percent in 2012 and 41 percent of bisexual women and men married in 2016 compared to 12 percent in 2012.
Marriage equality has begun to simplify finances for same-sex couples, enabling them to file joint tax returns, list partners on health insurance and pay health benefits with pre-tax earnings, and ensure a spouse’s interests are protected in the event of death.
But the downside is the risk of higher taxes, Sluyter said.
“On the upside, you don’t have to pay twice for both of you in a couple to do your taxes but you do have to look out for the marriage penalty, which is created by increased income,” Sluyter said.
Wage inequality, workplace insecurity and income disparities are among the challenges that remain.
“The income gap in this community requires that they think through the allocation of their resources and focus on retirement,” Sluyter added.
According to the study, lesbian women earn less than heterosexual women, reporting an average annual salary of $45,606 vs. $51,461. Gay men reported earning an average of $56,936 compared to heterosexual men who earn $83,469.
Glennda Testone, executive director at the LGBT Center, said financial planning is the next step in advancing the LGBT cause.
“We must continue working to overcome the serious remaining barriers to leading happy, healthy lives that all of us deserve, and having professionals who know our community and can help us attain our dreams is vital to achieving that,” she said.
Juliette Fairley is a business and finance journalist who has written four personal finance books for John Wiley & Sons and has written for major news organizations, such as The New York Times and The Wall Street Journal. She is a member of the American Society of Journalists and the New York Financial Writers Association and a graduate of Columbia University's Graduate School of Journalism. Juliette can be reached at [email protected]
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