September 20 2023 | Team nudge
Global benefit edu-action: it's time to make moves
Our latest ebook on how to drive awareness, understanding and action on employee benefits.
4 min read
It's pride month, so what better time than to share some financial tips with your LGBTQ+ community. The personal finance benefits to married LGBTQ couples have expanded by leaps and bounds in the last decade since same-sex marriage was legalized. Yet, gaps in financial education and familial wealth still exist when LGBTQ couples are compared to their non-LGBTQ counterparts.
These may include challenges when it comes to saving, investing, applying for loans and facing discrimination when working with financial intuitions or financial advisors. In fact, one in four LGBTQ Americans say they’ve experienced financial challenges due to their gender identity or sexual orientation, according to a 2019 Morning Consult poll.
LGBTQ individuals are also less likely to have a savings account and less likely to own stocks or mutual funds than the general population, according to a 2017 Prudential report. Home ownership rates are much lower among LGBTQ couples compared to non-LGBTQ counterparts, possibly due to lower rates of saving and discriminatory practices among financial institutions when same-sex couples seek a loan. These couples were rejected from a mortgage 73% more often than heterosexual couples, received interest rates at .2% higher and as a group overpaid by an estimated $86 million each year for home mortgages.
Gaps also exist when it comes to retirement savings among same-sex and LGBTQ couples. These individuals are 5% less likely to have a 401(k) or retirement plan and 12% less likely to have an IRA.
Understanding these wealth gaps, same-sex and LGBTQ couples can take steps to protect themselves and their finances going forward.
Fighting financial discrimination as an LGBTQ individual or couple
You have rights aimed at protecting you from discrimination due to your sexual orientation or gender identity. Learn more about your protections:
Financial Tips for Married Same-Sex, LGBTQ Couples
With the ability to legally marry comes many benefits of which LGBTQ couples should be sure to take advantage.
Married individuals can file jointly to receive a combined standard deduction of $27,700. Individuals can typically only gift up to $15,000 before paying a gift tax penalty, but spouses can gift an unlimited amount of cash to one another without paying any gift tax on the funds. You will also be exempt from paying inheritance tax or estate tax on any spousal transfers.
As a married couple, you’ll enjoy the ability to compare employer-sponsored health insurance plans and select the one with the best financial and coverage benefits. You can both use the same health insurance, and your marriage counts as a qualifying life event to make changes to your plan.
Other types of insurance, like life, auto and renters, may also have spousal benefits. For example, your spouse will typically be covered on your existing homeowners and renters insurance policies when you marry.
Financial Tips for Unmarried Same-Sex, LGBTQ Couples
Like married couples, unmarried couples can designate one another as beneficiaries on accounts like investment accounts and life insurance policies. These should be reviewed regularly and updated as needed.
While selecting beneficiaries will help ensure your assets are available to your partner, unmarried same-sex couples may also want to consider creating and funding a living trust and medical power of attorney. These estate planning strategies will help you avoid the probate process and grant your partner access to your finances and the ability to make medical decisions on your behalf.
If you want more content like this, or simply want to experience what nudge's personalized financial education is like first-hand, get in touch and organize a demo.