LGBT seniors face special challenges in retirement

LGBT couples can face high levels of financial insecurity in their retirement years. Many in the LGBT community do not trust traditional financial institutions, and retirement income streams like social security benefits, state pensions, and more do not always recognize same-sex partners.

It’s common to worry whether you will have enough for retirement and be financially secure as you get older. But Services & Advocacy for Gay, Lesbian, Bisexual & Transgender Elders released a study in October 2014 finding that the LGBT community is far more concerned about these issues.

SAGE, a non-profit group focusing on improving the lives of older LGBT people, found that 51% of LGBT elders are worried they won’t have enough money as they age, compared to 36% of the general population. Additionally, over 40% of older LGBT people fear they’ll outlive retirement savings and are very concerned they’ll have to work beyond retirement age, with only a quarter of non-LGBT people sharing the same level of concern.

LGBT seniors and financial security

This elevated level of financial insecurity in the LGBT community, in addition to higher poverty rates among aging LGBT elders, can be attributed to several factors, according to Robert Espinoza, senior director of public policy and communications at SAGE.

Espinoza explains that today’s LGBT elders lived through decades of overt institutional discrimination, leading many of them not to trust financial institutions. SAGE research has found they’re more likely to do retirement planning on their own. Additionally, workplace and employment discrimination has resulted in less career advancement for many, leaving them with less in retirement savings.

In addition, marriage equality laws are currently a patchwork, Espinoza says, leaving significant confusion about federal benefits.

“Even though same sex marriage is slowly moving across the U.S., the rights in states that do not recognize same sex marriage are a concern for retirement,” says Kimberly J. Howard, a certified financial planner and owner of KJH Financial Services in Newton, Massachusetts, and Denver, who helps LGBT individuals and families. “For example, Social Security, state pension, company pensions and military benefits do not always recognize same-sex partners for spousal benefits. The lack of spousal benefits could determine whether the retirement phase is a comfortable or a stressful time.”

Enita Torres, a 56-year-old Houston resident, says she’s anxious about whether she and her partner of nearly 30 years will be able to receive each others’ Social Security benefits.

“The way the laws are now, if I pass away, I’m not clear if my partner could get my Social Security benefits,” Torres says. “The federal changes aren’t clear, so I’m just not sure.” She says she and her partner also worry about not getting property-tax exemptions and retirement health care benefits that her parents enjoyed.

Espinoza also says ageism can be a problem.

“In the LGBT community, we find there’s an obsession with youth, and people don’t want to talk about aging,” Espinoza says. “If you’re not talking about aging, you’re probably not talking about the type of life you want to live in your older years.”

LGBT-friendly financial, legal professionals

Determined not to be another statistic? An LGBT-friendly financial planner is your greatest ally. Howard says many LGBT people are reluctant to seek out advisors, but it’s important due to the unique financial issues facing the community. “These issues include spousal retirement benefits, state and company pensions, how to handle beneficiary concerns and long-term care policies,” she says. “Also, as hard as it is, the individual needs to be forthcoming about being LGBT, or advice may not be very helpful.”

If you’re not sure where to go, some financial institutions now have planners dedicated to the LGBT community. A pioneer in this field, Wells Fargo created the Accredited Domestic Partnership Advisor program, which has over 500 advisors across the countryqualified to help same-sex spouses and domestic partners plan their finances.

Margie Archer, a vice president and advisor in Wells Fargo’s program, says it’s important to find an advisor you can be authentic with and start planning now. In addition to helping you answer common questions such as how much you need for retirement and when you can retire, Archer says LGBT-friendly advisors are invaluable for same-sex couples. They can help you with concerns such as whether your partner will get your Social Security or retirement benefits, how to ensure your partner inherits your assets, whether it is financially smart for you marry and whether you should make a financial plan together or separately.

There are other steps you can take now to feel more prepared for your future. Follow these expert tips for increased financial security:

Create an advance directive
An advance directive is an important part of financial planning, Espinoza says, because your end-of-life and medical decisions may affect your financial decisions. An advance directive contains both a living will, which explains your health care wishes, and a medical power of attorney, which allows you to designate a health care proxy. Your health care proxy is the person you choose to make your medical decisions if you become incapacitated physically or cognitively. This person also would manage the financial aspects of your health care, he explains. You can create these legal forms separately, but creating them together ensures they’re in sync.

Espinoza adds that although most older LGBT people are single and don’t have biological children, the law privileges your biological next of kin as your health care proxy. “If you want to protect and support your family of choice, make sure you have planned to do that and it doesn’t default to blood relatives,” he says. Archer also recommends bringing these documents with you when you travel outside of your state or country in case anything happens to you, especially if you are married but traveling somewhere that doesn’t recognize it.

Consider long-term care insurance
Archer says aging same-sex couples, especially those without children, often worry whether they can live at an elder care facility together. She says having long-term care insurance is vital to ensuring you will be taken care of and have a choice in where you go.

Don’t forget estate planning
You should also consider what happens to your money after your death. Espinoza says disputes about how the deceased’s money and estate should be handled are common among family members. “If you really want to make sure your friends and family understand and respect your wishes, you have those conversations as early as possible,” he says. “They should not find out after you die how you want your money spent.”

Hire an LGBT-friendly lawyer
An LGBT-friendly lawyer can create the documents mentioned above, and if you’re in a same-sex partnership, help you interpret the laws and determine which benefits you’re eligible for in your state. It’s important to understand what if any survivor benefits, tax benefits or Social Security you will receive so you can plan your finances accordingly.

Torres and her partner have been working with LGBT lawyers for 20 years to ensure they have wills and other documents needed to protect each other. “We have to put a lot more in writing to try to keep our relationship and inheritance safe,” Torres says. She still worries that their documents could be challenged if they get a judge who doesn’t recognize their relationship, but they feel as prepared as they can be with their documents in place and joint tenancy on their financial accounts.

Resources for the aging LGBT community

If you need help finding LGBT-friendly resources where you live, visit the local resources section on SAGE’s National Resource Center on LGBT Aging. They list services by state that can help with everything from finding an LGBT-friendly retirement facility to getting a free advance directive. Lamba Legal also can help you determine your rights in each state.