It's already a challenge for employees to save enough for retirement, but
While the median retirement savings for an opposite-sex married couple is estimated to be $88,000, LGBTQ couples have only saved $66,000, according to data from UBS. Due to a multitude of factors, this demographic may be headed toward a financial crisis without the right interventions, says Barrett Scruggs, VP of workplace financial well-being at SoFi at Work.
Understand The Unique Financial Challenges LGBTQ Employees Face
"The student debt burden, coupled with pay inequality, comes together to create a unique financial hardship for this community," Scruggs says. "All of those things combined lead to a higher likelihood that the LGBTQ community is not going to be prepared for retirement, more so than the rest of the population, which can lead to a retirement crisis."
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Scruggs points out that gay and lesbian individuals, for example, make 10-30% less than their straight colleagues, while transgender employees typically make just 60% of what their non-LGBTQ counterparts make, according to the Bureau of Labor Statistics. Without the funds in their bank accounts today, LGBTQ employees have less money to spare toward their long-term savings.
Additionally, their student loan and credit card debt far surpasses that of non-LGBTQ employees: data from Student Loan Hero estimates LGBTQ employees have, on average, $16,000 more in student loan debt than their non-LGBTQ counterparts.
Yet while employers have added many financial wellness benefits to
"There is a gross misunderstanding of the financial hardships the LGBTQ community faces," he says. "But it's not just for this community — I think in general, employers are overconfident in the financial position that their employees are in. Doing a deep dive assessment and using that data will give an informed understanding of the financial conditions or well-being their workforce has."
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To tailor support
Engage LGBTQ Employees In Financial Wellness Programs
For this group, getting them engaged in retirement benefits might not be the top priority — instead, offering a holistic financial well-being solution that addresses student loan repayment, debt relief, emergency savings and other issues can help employees eventually connect the dots to retirement.
"What we've seen is that LGBTQ community tends to have a higher debt burden than the general population," Scruggs says. "Looking at student debt benefits is a very easy place to start, and then connecting it to retirement through SECURE 2.0 provisions that makes it easier for employers to contribute to an employee's 401(k) based on that student loan repayment history."
Employers should also be turning their eye toward helping employees build up their emergency savings, another area of focus
"Employers need to start thinking about how to reinforce or incentivize the right behaviors to save," he says. "Financial literacy and education is going to be table stakes, and employers will be doing a much better job of incorporating the right type of access to information, both digital and human, to help their employees understand topics that they're not really comfortable researching on their own."