When it comes to retirement, LGBTQ clients have many of the same needs as non-LGBTQ clients, such as accumulating savings and exploring benefits.
However, as they prepare to settle down and retire, LGBTQ people tend to have higher debt and lower confidence, which can make them particularly vulnerable as they plan for retirement.
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Advisors can take steps to make sure they are conscious and respectful of how clients' identities may affect their retirement planning.
Financial Planning spoke with three LGBTQ advisors who service clients in their community and asked them about how they best provide top-notch advice to their clients.
- Jana Davis, a financial advisor with Santa Monica, California-based registered investment advisory firm
Abacus Wealth Partners - Landon Tan, founder, planning lead and financial advisor with Brooklyn, New York-based registered investment advisory firm
Query Capital - Jennifer Hatch, president, partner and senior financial advisor at New York-based registered investment advisory firm
Christopher Street Financial
Create a welcoming space
To best serve clients, advisors should foster an environment that communicates acceptance and approachability.
Tan said advisors should create practices that are welcoming to people of all gender identities and sexualities.
"Before you put any rainbow paraphernalia in your office, make sure you have those skills down so you're not falsely advertising a safe space," he said.
Tan recommends creating systems that ensure that people can "show up as themselves," by making sure that forms, customer relationship management systems and facilities allow use of preferred names, gender pronouns and bathrooms.
"You really have to do the work, fix your system and practice the way you're addressing people," he said.
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Tan noted that LGBTQ clients have historically struggled to access financial services and may have gaps in knowledge that advisors should address.
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Davis stressed the importance of knowing clients well.
"I know my clients' lives. It's not just about investments," she said.
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Tan said that advisors should approach LGBTQ clients from a perspective of "access" rather than "fascination."
"I think that advisors working with LGBTQ clients need to be thinking about access and how they're approaching people and whether or not their systems are set up to be welcoming," he said.
Understand family structure
Marital status can greatly influence the financial choices available to retirees and their loved ones.
"So the issue is not, 'Are you LGBTQ or straight,' but 'Are you single, partnered or married,'" Hatch said.
Davis and Hatch explained that marriage is beneficial for couples who want to receive the most generous benefits from employers and simplify their finances in retirement.
From pension plans to Social Security, policies often require that partners have been married to receive survivor benefits when one dies.
"There are lots of technicalities to these different products that are out there for us," Hatch said.
"You can take advantage of them and you can really feather your nest if you're investing and saving in this tax-advantaged way."
While LGBTQ marriages have increased by 3.5 percentage points since the 2015 Obergefell v. Hodges Supreme Court decision that legalized same-sex marriage, same-sex couples marry at rates 36 percentage points lower than heterosexual couples, according to
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In Davis's experience, LGBTQ couples are more likely to separate their accounts.
Davis suggested that advisors guide conversations for clients early about how to deal with finances and set up accounts, and how to prepare for potential disparities between partners' retirement incomes.
"I highly advise on keeping your own accounts and having a joint account and knowing what goes in where," Davis said. "I think it's always important to have a little of your own stash."
Hatch emphasized three factors that influence how she advises clients on their retirement plans.
"I would say that really the issues that would impact how I would advise somebody about retirement would be based on those things," Hatch said. "Where they are, what the expectation is in terms of life expectancy, and their relationship."
Tan highlighted the importance of advisors avoiding assumptions and stereotypes when working with LGBTQ clients, pointing out that circumstances like marital status or having kids can vary.
"It's hard to speak as a monolith because there are so many situations in the LGBTQ community," he said.
Be thorough with paperwork
Although filling out forms is important for all individuals regardless of sexual orientation or gender identity as they plan for retirement, Davis said that LGBTQ individuals must be "hyper-vigilant" when it comes to completing paperwork, especially related to health care directives.
Davis emphasized the importance of eliminating ambiguities in paperwork that spells out end-of-life care decisions, health care proxies and financial power of attorney. Many health care forms, Davis pointed out, must be signed by a doctor and notarized.
"Don't leave the gray area for anyone to step in and question," Davis said. "Eliminate the gray."
According to the American Association of Retired Persons,
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Davis warned that unmarried LGBTQ couples must consider the fact that if they are still under the age of 65 and not yet eligible for Medicare, it might be more difficult to receive a partner's medical benefits.
"An unromantic reason to get married is medical coverage," Davis said.
Hatch said that clients can sometimes be hesitant to make end-of-life care decisions.
"But I think most especially when it comes to health care decisions, most people don't have a lot of clarity about what they want because they don't like to look at themselves as being old and needing help," Hatch said. "Nobody likes to need help."
Ensure maximized savings
LGBTQ people tend to have less in savings, making guidance from advisors especially important.
"If you're behind in savings and you want one day for work to be optional, you've got to be a little uncomfortable," Davis said.
Davis noted that individuals throughout the LGBTQ community face challenges when saving — especially lesbian couples, whose earnings are typically lower than gay male couples.
Advisors should help LGBTQ couples consider income sources during retirement, Davis said, and ensure that their savings and earnings together are sufficient to support their retirement plans.
"There's no magic there. You've got to put in the work," she said.
Davis recommends paying attention to employer benefits and opting into programs in which employers match 401(k) contributions.
"I don't take the excuse that 'I just don't have time to read the benefits or to learn it,' because you're missing out on money," Davis said.
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Davis said that relying on Social Security benefits is not a replacement for savings. "I believe Social Security benefits will be available to us, even in the future. But now and especially in the future, it will never be enough to live off of and have any kind of life," she said.
Hatch said that as people age and their assets accumulate, managing those assets becomes more difficult without the help of an advisor.
"But it gets more complex, and so if you're not working with an advisor and you're doing it yourself, you will definitely need assistance at a certain point, and even people with an advisor need assistance at a certain point," she said.
Tan said that acquiring savings is especially important for LGBTQ individuals.
"When I think back to the legacy of discrimination, the AIDS crisis and all the trauma that's affected people's lives, I think that has ripple effects," Tan said. "What I hope for this generation is to think about, 'How do I have the kind of stability in my life that allows me to show up for my community?'"
