Gay couples headed towards retirement face a double-whammy: First, according to a new study, they are less likely to be financially prepared to stop working compared to members of the general population.
Second, since most states don’t allow gay couples to marry, they are unable to access tax benefits such as inheriting their partners’ estates tax-free upon death (a problem relevant only to wealthy couples). They are also unable to grant their partners Social Security survivor benefits. That can leave surviving partners in a financial tight spot if the primary earner and asset-owner dies first.
The MetLife Mature Market Institute reports that lesbian, gay, bisexual and transgender baby boomers are less likely to feel financially prepared for retirement than their heterosexual counterparts, with 31 percent saying they are prepared versus 39 percent of the generation population. As a result, almost half of LGBT baby boomers say they don’t expect to retire until they are at least 70. (Just four in ten respondents in the general population say the same.) Members of the LGBT community are also more likely to fear outliving their income (29 versus 26 percent).
[See 2010: Cheapest Year to Die?]
But that doesn’t mean LGBT baby boomers need to resign themselves to a cash-poor retirement. MetLife makes the following recommendations to members of the community:
What about the popular stereotype that gay retirees are wealthier, since they’re less likely to have had kids sucking away their income for the previous 30 years? The MetLife study suggests that’s just a myth, and that any financial benefit of being gay doesn’t outweigh the extra challenges LGBT individuals and couples face.