You may be shocked to hear that wealth creation is happening at a faster pace among diverse communities, including the Black, Latino, and specifically, the LGBTQ+ communities, compared to the general US population. This is according to new research from Merrill Lynch. As a gay financial planner who works with many people from these groups, this is great news.
The study focused on “affluent households,” which, according to the three reports from Merrill Lynch, means US households earning more than $125,000. According to the diversity reports, affluent Black households have increased their wealth by 65% since 2015. While Gay, Lesbian, and Transgender affluent households saw their net worth skyrocket by a whopping 76% since 2015. Latino households saw the most significant gains in wealth, with an increase of 81%. For comparison, the average “affluent” home saw its wealth grow by 53% during this time frame.
Before you pop the bottle of Dom Perignon (or your favorite celebratory beverage), there is still a pay gap based on sexual orientation, gender, and race. Furthermore, in light of the expected repeal of Roe v. Wade, LGBTQ+ rights could be more successfully attacked (they are always under some type of attack – not to sound too pessimistic).
Financial Freedom Is a Top Priority for Gay Households
As a gay financial planner, I have seen the difference in family dynamics between my hetero clients and LGBTQ+ clients. About one-third of LGBTQ+ respondents said family members did not support them. While I believe acceptance is improving, it is not a given.
LGBTQ+ Americans tend to get married later, and if they have children, they tend to have them later in life. Additionally, the cost of starting a family for LGBTQ+ individuals is usually much more expensive on average. That being said, for same-sex couples who don’t have children, there is a lot more money to go around, which can make it easier to live a fabulous gay lifestyle while at the same time still building wealth.
About The Diverse Viewpoints: Exploring Wealth in the LGBTQ+ Community Study
The LGBTQ+ community is highly diverse, with members at the top and bottom of the income and wealth spectrums. Merrill conducted an in-depth study to help understand the financial planning needs of the LGBTQ+ community. The study also explored the financial challenges that members of the LGBTQ+ community overcame. “‘Diverse Viewpoints: Exploring Wealth in the LGBTQ+ Community is just one in a series of studies that Merrill has commissioned.
Shared Financial Challenges of the LGBTQ+ Community
While there are many examples of highly successful members of the LGBTQ+ community, it often takes more hard work to reach these levels of achievement. According to the Merrill survey, affluent members of the LGBTQ+ community were twice as likely to have felt they had to work harder than the general population to get where they were today.
Beyond The Fear of Growing Old While LGBTQ+
There is fear throughout the LGBTQ+ community about growing old alone. I could easily make a joke here about the fear of looking old, but this is a serious issue for many in the LGBTQ+ community. As a group, we face many challenges as we age.
One pertinent question is, “Who will look after us as we age.” LGBTQ+ folks are a third more likely to be concerned about paying for long-term care costs when compared to the general public. For one thing, long-term care (LTC
Health Care and LTC Costs Are Bringing Stress To the LGBTQ+ Community
Caring for an aging parent can become a full-time job. Most people in the LGBTQ+ community will be retiring without children to help assist them through the aging process. Without offspring to help be your advocate as you age, you will need to turn to things like health care proxies to determine who can help make decisions on your behalf if you were to become incapacitated. The only bright side here is that the realities of LGBTQ+ aging have led members of the gay community to be more focused on long-term care planning and end-of-life planning than their heterosexual peers.
Without children as advocates and with worries that public facilities may not be trusted to carry out one’s best interest, health care proxy issues are best sorted out in advance: LGBTQ+ individuals were far more likely to be focused on end-of-life planning than their non-LGBTQ+ peers, and older affluent LGBTQ+ individuals were also more likely to have a will than the general population. In some cases, that may be because we have fewer children who would be natural heirs. From a basic estate planning viewpoint, if your family rejected you for being gay, you are likely reasonably motivated to ensure they don’t receive your life savings as an inheritance simply because they share some DNA with you.
Health care is another financial burden as we in the LGBTQ+ community age. We tend to live in relatively high cost-of-living areas. We also face a slew of increased medical risks for various health conditions. These are even more pronounced for the transgender community and those living with HIV.
I consider myself to be highly health-conscious. As a gay financial planner, I see the benefits of living a healthy lifestyle in retirement. I am not surprised one bit that affluent members of the LGBTQ+ community were a third more likely to list paying for health care as a significant source of financial stress and a financial goal. While I am not a doctor, it has been drilled into my financial guidance that routine medical care can hopefully catch medical issues before they become a medical crisis. Think about detecting cancer earlier versus later.
The Gay Pay Gap
According to the US Department of the Treasury, gay married couples make more money than lesbian couples. Both gay and lesbian couples make more than opposite-sex married couples. This data is in direct conflict with virtually every other survey, which shows a pay gap for members of the LGBTQ+ community.
It is pretty easy to explain how gay and lesbian married couples can make more money per year and at the same time be paid less for equal work. The proportion of dual-income households among gay and lesbian couples is higher than that of opposite-sex couples. You may have two lesbians earning less both because they are female and lesbian, but if both work full-time, they, on average, make more than the so-called nuclear family where the husband works and the wife stays home (don’t shoot the messenger, I’m just pointing this out).
Two gay men won’t suffer lower pay from the gender pay gap, but each will often earn less because they are gay. In total, two gay men working full-time will, on average, make more than the average opposite-sex married couple, which in many cases does not include two full-time workers.
When it comes to LGBT financial planning, the gay community faces unique challenges. We are up to the task of overcoming them and staying on track for our fabulous and gay financial goals. Keep your head up and make smart money moves. You, too, can reach financial freedom