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Gay Couples Redefine 'Golden Years'

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When the U.S. Supreme Court struck down certain provisions of the Defense of Marriage Act (known as DOMA) and opened the doors to more gay marriages, the physical and emotional lives of many gay couples were changed forever. New and accepted human rights bring up an important question in the LGBT community: Are you where you thought you'd be at this point in your life? Gay men and women are living longer (due to healthy lifestyles and medical advances related to HIV and non-HIV ailments alike) and this creates new questions about aging and retirement. In a community that tends to not live on a timeline, couples now need to look at their retirement as inevitable and in a whole new light.

An estate tax issue was actually at the heart of DOMA controversy. Here's the background: Edith Windsor and Thea Spyer, a same-sex couple residing in New York, were lawfully married in Canada in 2007. Spyer died in 2009, leaving her entire estate to Windsor, who tried to claim the federal estate tax exemption for surviving spouses but was prevented from doing so by Section 3 of DOMA, which stated that the term "spouse" only applied to marriages between a man and woman. The IRS denied Windsor's claim and compelled her to pay $363,053 in estate taxes. Windsor challenged it all the way to the Supreme Court which ruled last year that Section 3 was unconstitutional -- and gay marriage changed forever. Later, Attorney General Eric Holder expanded recognition of same-sex marriages in federal legal matters, including bankruptcies, prison visits and survivor benefits.

In the next 20 years, the number of LGBT adults age 65 and older is expected to double, reaching more than three million by 2030. With gay marriage comes new challenges and responsibilities in retirement.

First the good news:
1. Same-sex married couples will be able to inherit their spouse's estate without tax penalties. However, gay couples should be specific in will or trust arrangements, particularly if you live in a state that does not recognize same sex marriages and even in some states that have domestic partner laws.

2. Gay couples will now be able to claim spousal-related Social Security benefits. Married couples in states where marriage is legal will be entitled to spousal benefits during marriage and survivor benefits upon the death of one spouse.

3. Medicare benefits equal out. Legally married same-sex seniors on Medicare are now eligible for equal benefits and joint placement in nursing homes.

4. Life insurance for estate taxes may no longer be needed. Same-sex couples may not need life insurance for federal tax reasons anymore, but they may still need it for state-specific situations. Life insurance can provide financial protection for couples, as well as any children they may have.

And now the bad:
1. All states are not created equal. Because some states don't recognize gay marriage, some state-run programs (Medicaid as a prime example) may continue to treat all LGBT applicants as individuals instead of married couples.

2. Just because you are married doesn't mean you are better prepared for retirement. Americans remain woefully ill-prepared for retirement. A recent Wells Fargo study grabbed national attention, reporting that 37 percent of Americans don't ever expect to retire but instead will have to work until they are too sick or pass away. Survey respondents said paying monthly bills is their highest priority, and saving for retirement is a distant second. Among other statistics, 48 percent are not confident they will be able to save enough for a comfortable retirement. Clearly, we are a country in retirement crisis and gay couples are not immune.

3. Gay couples need to think long-term. With marriage comes the responsibility to look long term and plan for retirement with another person in the financial picture. Expenses in post-retirement, long-term healthcare costs and joint plans for nursing home care are now the responsibility of two individuals -- in it for the long haul.

4. Traditional savings methods may not be enough. The cold reality is that traditional retirement savings methods (401ks, IRAs and other retirement plans) have not done the job for most seniors and boomers on the verge of retirement. Gay couples must join the ranks of the "traditional" masses and start looking for other means to fund retirement. Assets such as homes and property and even life insurance policies can be leverage to help fund retirement. Reverse mortgages and life insurance settlements are among the non-traditional financing options which may help married gay couples retire in style.

Why is this so important? Paying for retirement isn't typically on the gay couple's radar. Gays approaching their "Golden Years" represent a unique segment of the financial marketplace. They are part of the first wave of an openly gay generation to retire but also one that has seen its ranks ravaged by HIV and AIDS. Many are confronting retirement on different economic and emotional terms than our straight counterparts. Knowing our options is critical.

The U.S. Supreme Court's ruling on DOMA changed the lives of gay couples forever, but for the future to remain bright, the LGBT community needs to join the mainstream public and rethink how they will pay for retirement.