5 Ways Financial Planning Is Different for the LGBTQ+ Community

Quick Answer

The LGBTQ+ community faces unique financial and legal challenges. Historic and ongoing forms of discrimination have made it harder for these people to save and build wealth. The community also often faces expenses the general population doesn’t, especially if they want to start a family.

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Same-sex marriage was legalized nationwide in America in 2015, but the LGBTQ+ community still faces unique financial challenges that can make money management more difficult.

With the effects of discrimination, along with expenses many in the general population don't have, LGBTQ+ individuals experience unique challenges. Here are five reasons why financial planning is different for our community and what we can do to help overcome these inequities.

1. We Face Discrimination

Discrimination against LGBTQ+ people is illegal in many settings, but it still happens—and legal forms of discrimination are still all too common. Research shows discrimination is typically worse for transgender people and LGBTQ+ people of color. The Equality Act has yet to pass, so some businesses, organizations, doctors and services still have the right to turn away members of the LGBTQ+ community.

Those in the LGBTQ+ community who are seeking help with financial planning, estate planning or other legal or financial assistance may encounter professionals who treat them poorly or even outright refuse to work with them. Additionally, transgender people may face hurdles at financial institutions that make it difficult to update their name and gender.

We don't have to let this stop us from taking control of our finances. Instead, we can seek out professionals who are not just accepting of the LGBTQ+ community, but well-versed in the issues we face. There are many online directories where you can find affirming, knowledgeable professionals. For example, the National Association of Personal Financial Advisors has a search function that filters for those with LGBTQ+ specialization, and Wells Fargo has a database of its advisors who are trained in LGBTQ+ financial challenges.

It's also key to know your rights (the ACLU is an excellent resource for this), so you can elevate a concern or file a complaint should you experience illegal discrimination. For example, mortgage lenders, landlords and housing providers are not legally permitted to discriminate based on sexual orientation and gender identity.

2. Past Discrimination Still Impacts Us

Pervasive historical discrimination has left a huge mark on the LGBTQ+ community. A 2018 Experian survey revealed that 62% of LGBTQ+ people have experienced financial challenges because of their identity.

Numerous other surveys over the years have documented a pay gap, savings gap and poverty gap between the LGBTQ+ community and general population. Experts often point to layers of historic discrimination; for one, workplace discrimination was previously legal, so LGBTQ+ people often faced termination or lack of promotions that hindered career growth and wealth-building.

Additionally, until recently, same-sex couples couldn't reap the benefits that come with marriage. Things heterosexual married couples take for granted—such as health insurance through your spouse, marital tax breaks and Social Security spousal benefits—were unattainable even to lifelong committed partners since they weren't considered legally married. If one partner died and didn't leave a will, the surviving partner may not have been eligible to inherit any assets. Over time, these have left LGBTQ+ older adults with much less financial security than their peers.

On the bright side, LGBTQ+ legal protections have increased overall in recent years, so younger couples who can legally marry and enjoy these benefits—and increased workplace discrimination protections—may have a brighter financial future than their elders. Plus, there are a growing number of financial resources for the LGBTQ+ community you can lean on.

3. We Have to Plan and Pay to Have a Family

While many heterosexual couples face challenges having a baby, a large number can do so without any reproductive assistance or cost. Due to biological constraints, most LGBTQ+ people wanting to build a family require professional help to have children. There are myriad ways to do this, from adoption to surrogacy to fertility treatment with donor sperm. Unfortunately, these come with a huge cost that requires careful financial planning for having kids, whether it means years of saving or having to borrow.

Adopting through the public welfare system or foster-to-adopt programs can cost under $3,000, and in some cases be free, according to the Family Equality Council. But private domestic adoptions and international adoptions can cost between $20,000 and $50,000, according to the U.S. Children's Bureau.

If someone in the couple can carry a child but requires reproductive assistance, this can also be very costly, especially since health insurance doesn't always provide coverage, according to the Kaiser Family Foundation. Fertility medicines alone can cost thousands, and intrauterine insemination along with donor sperm can easily exceed $4,000. In-vitro fertilization (IVF) costs even more, with initial costs ranging from $13,000 to $20,000. IVF often requires several attempts, so the total cost for a successful pregnancy is often over $60,000.

For families who choose to use a surrogate instead, the costs range from $60,000 to $150,000 and potentially more. Couples hoping to have children in the future should start saving early, consider applying for grant programs and carefully compare financing options.

4. We Have Different Needs

In addition to costs associated with family-building, LGBTQ+ people may experience other expenses that require more saving or borrowing. Some examples include:

  • More medical costs: Transgender individuals who take medication, have surgeries or need legal assistance for name and gender marker changes often incur significant out-of-pocket costs.
  • Added fees to become a legal parent: Same-sex couples may want to complete a second-parent or step-parent adoption of a child so that both are considered legal parents, which can cost hundreds to thousands of dollars in legal fees.
  • Lawyer fees: Due to concerns about discrimination, same-sex couples may also incur more out-of-pocket fees to hire a lawyer and ensure they have an estate plan with adequate protection for their spouse and any children.
  • Potentially less retirement funds: LGBTQ+ adults are more likely to be single, live alone and/or be childless, so they may have fewer resources or caregivers in their elder years. This means living costs may be higher. In their younger years, they may want to prioritize paying for long-term care insurance to ensure they're taken care of later.

5. It's Harder to Manage Debt

Due to historic discrimination and added costs, the LGBTQ+ community faces financial challenges that can make managing debt more difficult. Individuals in the LGBTQ+ community with lower income and fewer benefits may be more likely to struggle with debt, which can in turn damage credit. And the worse someone's credit score, the higher interest rates they'll have to pay when they do need to borrow money. It can easily become a vicious cycle.

When LGBTQ+ people are able to make efforts to improve their credit, it opens more doors to safer lending options, lower interest rates on debt and more access to housing and potentially jobs. One way to potentially make a quick impact is to sign up for Experian Boost®ø, a free tool to get credit for utility, phone and streaming service payments.