LGBTQ+ Guide to Personal Finance

The LGBTQ+ financial fairytale, often portrayed in the media, tells the story of wealthy gay couples enjoying flamboyant lifestyles and hosting glamorous parties at their perfectly decorated brownstones houses, somewhere in the Upper East Side. While the stereotype might be true for a few privileged members of the community, the reality of the vast majority of gays, lesbians, and transgender people in the U.S. is far from being luxurious. 

According to data from Prudential, LGBTQ+ people earn substantially less than straight people annually. A study from Experian shows that discrimination can also lead to higher housing costs and harassment in the workplace. In addition, LGBTQ+ people fall behind heterosexuals 25% on average when it comes to retirement savings, according to an analysis of the Federal Reserve's Survey of Consumer Finances. 

LJ Vogel, financial advisor

LJ Vogel, a financial advisor from New York, points that the LGBTQ+ community not only is more likely to have less income than straight people but also has different needs affecting their finances. "First of all, our planning often has to include family planning costs for surrogacy or adoption. We also tend to have jobs without employer-sponsored retirement plans, meaning that we need to save more on our own using individual accounts. We actually have overall higher costs during retirement because we are more likely to live on the coasts where it's safer for us, and that means a higher cost of living. We are also more likely to have higher student loans and therefore longer repayment periods that affect our ability to save," he explains. 

How can the community overcome these financial obstacles? Planning and investing. "Our needs may be a bit different, but in reality, the things we need to do are fairly similar to anyone else. We need to get life insurance, we need to invest, and we need to have a long-term plan for our money."

LJ has a mission of helping LGBTQ+ people achieve their economic goals. "We have been left out of wealth-building strategies in the past. I think for many of us, it can be intimidating to begin investing in mutual funds or to go and open an IRA. Many of my clients within the community never felt comfortable reaching out to an advisor to discuss their options because they weren't sure they would be accepted."

Retirement

Speaking of IRA, you might be surprised to know that members of the LGBTQ+ community are less likely to have an individual retirement account (IRA) than straight Americans — 18% vs. 30%, respectively. "We are greatly affected by having an overall lack of wealth within the community. The past few generations are trying to bounce back from the destruction of the AIDS crisis, but we have to remember that many people ended up with few friends or family to help them as they aged. What we have now are quite a few elders in the community who were not really able to plan for the costs of aging", LJ says. 

Student Debt

The LGBTQ+ Community is also more likely to struggle with student debt because of a lack of family support. If you are in this situation, the financial advisor recommends "paying yourself first." "This just means that if you get your paycheck from work, invest a portion and then pay your bills. Eventually, your investments will give you returns that can assist you with paying off those loans. I have a few clients right now that are using variable life insurance (life insurance with stock market investments) as a retirement plan, and eventually, they'll have enough growth to make larger payments towards their loans."

Savings X Investing

According to data from Experian, a large number of LGBTQ+ people struggle to maintain adequate savings. But instead of keeping your money in a bank saving account, LJ thinks LGBTQ people should be investing. "The inflation is higher than the interest you're making in a bank account. Your dollar will be worth less every single year you keep it sitting in your bank account. The stock market is a great way to keep up with or beat inflation, so your dollars are working for you every step of the way."

Guidance

As a transgender person, LJ knows the importance of working with financial planning within the LGBTQ+ community. "It's my duty to show my clients that we deserve to have the same wealth-building options as anyone else and now they have someone who understands them to guide them through it," he says. 
If you need financial guidance or want to know more about LJ's work, you can follow him on social media or subscribe to one of his webinars. "I also work with other professionals within the community such as a legal liaison and a real estate agent. I help people within our community have a safe space to discuss their goals and finances, and we work on strategies to build up some wealth and prepare for the future."

More on LGBTQ+ finance:
Point Foundation
The Myth of Gay Affluence
5 Financial Factors Impacting the LGBTQ+ Community

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