Is there a Pending LGBT Retirement Crisis?
While the LGBT community is benefiting from increasing financial prosperity and legal recognition, many economic challenges hit us harder than they do for straight citizens. Like everyone else, we are currently facing a retirement planning crisis but one that may well go beyond the risks of the rest of America.
News flash, baby boomers did not die before they got old. In fact, an estimated 10,000 boomers turn 65 every day. Unfortunately, we're in the midst of pending retirement crisis because many people in this country do not have a plan to cover their basic living expenses through what could easily be 30 years of retirement, not to mention medical costs or the inevitable challenges that come with advancing years. The ripple effect of this lack of a financial safety net, and trust me, Social Security is not going to come to the rescue here -- for such a huge population could well spell an economic catastrophe in the years to come.
As a group the LGBT community faces a slew of additional retirement issues, and appears to be even less prepared than some of our straight counterparts, whose fiscal responsibility is nothing to write home about to begin with.
SAGE (Services and Advocacy for GLBT Elders), the largest and oldest organization dedicated to improving the lives of lesbian, gay, bi-sexual and transgender seniors, produces some of the most valuable information on aging issues facing our community. Their Out and Visible study offers up some sobering insights when it comes to money and retirement.
• LGBT people are less likely to seek professional financial guidance: Retirement planning is complex enough on its own, but add all the complications caused by the various levels of marriage equality and the picture can get overwhelmingly confusing. That said, we really need expert advice we can trust. Unfortunately, the average financial planner is a late-50's white male, which means he is lot more likely to be socially conservative, and a lot less likely to be up on current status of gay financial planning law. This may explain why just 28 percent of LGBT respondents reported that they were working with a professional retirement planner (compared to 37 percent of the general population.) according to the SAGE report.
• Many LGBT people are still in the closet to financial professionals: I've met many people afraid to come out to a financial person. While I'm based in Los Angeles, I'm well aware of the pressures facing those who do not live in socially progressive locales. In fact, I work with many LGBT couples across the country who are deathly afraid of anyone finding out their sexuality. Oftentimes we've had to get creative with their financial plans to protect their privacy as a couple, while at the same time keeping any on paper connections between the two partners to a minimum. Picture trying to make sure your 401(K) goes to your significant other, but you won't/can't put their name down on the beneficiary form for fear of losing your job. (In many states people can still be fired for simply being gay.)
• Many LGBT people have smaller support networks: Too many of today's LGBT boomers and elder seniors are estranged from their families, are less likely to have children and more likely to live alone. This smaller support network is a real detriment in retirement where family help -- from simply helping get to and from doctor's appointments to more complex things like taking over finances -- is so essential.
The investment firm Fidelity recently estimated that someone who retires today can expect to spend $220,000 on medical expenses in retirement, OUT OF POCKET, AFTER INSURANCE HAS PAID!!!! Lacking support, those costs may climb significantly higher for the LGBT seniors who have to pay for services and logistics that family members do for free. Doctors' visits will cost the same of course, but the money for someone to drive you or take care of you has to come from somewhere. Where?
• Many LGBT seniors are not out to their healthcare providers: We're still not out of the woods when it comes to universal health coverage and many closeted seniors are concerned about receiving inferior care in the case they do come out. Combine this with higher incidence of HIV+, and we have a recipe for some big health care issues in retirement.
• Many LGBT lives are devoid of financial planning milestones: Some fairly typical life events that trigger sitting down with a financial planner simply don't happen for a large sector of our community. These often include motivating things like birth of a child, marriage or even things as simple as filing taxes jointly. Without a little extra push it's quite easy to put your head in the sand and ignore the future. I can't tell you how many times I've heard from my retired gay clients (particularly those who came of age during the AIDS crisis), "I never thought I'd be alive at this age."
In our youth-obsessed gay culture, it's all too easy to forget that getting older means that you're actually doing something right. You can deny it all you like and mainline Botox until the cows come home, but the fact is that if you plan on sticking around, you're going to want to plan for the inevitable financial challenges that are in the pipeline too. This is not the time put your head in the sand but better to face facts now and secure the services of a professional who can get you on track for financial independence for, literally, the rest of your life.
As for me, my husband and I have just opened an account to save for twin Ferrarri wheelchairs for when we turn 120, just to make sure we can afford someone really cute to push us around.
DAVID RAE, CFP®, is a Los Angeles-based retirement planning specialist with Trilogy Financial Services, a regular contributor to Advocate.com and a financial advisor proudly serving friends of the LGBT community. Follow him on Facebook or via his website, www.davidraefp.com. http://firstname.lastname@example.org
Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA,SIPC, a Registered Investment Advisor. Trilogy and NPC are separate and unrelated entities. Opinions expressed are those of David Rae and are not endorsed by NPC. This material contains forward-looking statements including, but not limited to, predictions or indications of future events, trends, plans or objectives. Undue reliance should not be placed on such statement because, by their nature, they are subject to known and unknown risks and uncertainties.