LGBT workers making strides in retirement readiness
Workers in the U.S. who self-identify as lesbian, gay, bisexual or transgender are better prepared for retirement than LGBT workers in eight other countries — in part because of increased efforts from plan sponsors.
New research by the Aegon Center for Longevity and Retirement, Transamerica Center for Retirement Studies and Instituto de Longevidade Mongeral Aegon found that the U.S. scored a 7.2 out of 10 when it came to retirement readiness of LBGT workers — 1.3 points higher than the total Aegon Retirement Readiness Index score of all nine countries surveyed. The organizations surveyed 900 LGBT workers from the U.S., Australia, Brazil, Canada, France, Germany, the Netherlands, Spain and the United Kingdom.
“Because change has happened so rapidly and recently among the LGBT community, it’s encouraging that so much progress has been made in a relatively short amount of time,” says Catherine Collinson, CEO and president of Transamerica Institute and Transamerica Center for Retirement Studies and executive director of the Aegon Center for Longevity and Retirement.
The legalization of same-sex marriage in the U.S. was the game changer because it allowed LGBT people to do things to better themselves financially, like file their taxes jointly for tax efficiencies and to enjoy the wealth transfer if one of the spouses passes away. They also can take advantage of government and employer-sponsored retirement and healthcare plans.
“This is a major economic breakthrough for same sex couples that until recently weren’t afforded those rights or that level of equality as non-LGBT people,” Collinson says.
Compared to the other countries surveyed, LGBT workers in the U.S. are better off, meaning that many have higher-skilled, white-collar jobs relative to other countries.
“U.S. workers are more engaged in planning and saving for retirement and are typically engaging in planning activities, much of which can be attributed to the prevalence of 401(k) and other DC savings plans,” she says.
Employers play a huge role in the success of the LGBT workers surveyed in the U.S. because workers of all demographics are more likely to plan for and save for retirement if their employer sponsors a 401(k) or similar plan.
“Today’s generation of LGBT workers has a much brighter retirement outlook than that of previous generations who were often disenfranchised and deprived of many civil rights,” Collinson says. “The extent to which LGBT workers in the U.S. are saving and planning for retirement is impressive.”
She adds that continued social progress in LGBT communities around the world is needed to “bridge inequalities and foster an inclusive environment that supports personal and professional growth and long-term financial security.”
Many older people who identify as LGBT did not have the legal protections now available to LGBT communities in the U.S., so many of them are financially struggling in retirement, she says.
The survey found that 84% of LGBT people in the U.S. feel personally responsible for making sure they have sufficient income in retirement, compared to 70% globally; 79% feel very aware of the need to plan financially for retirement, compared to 66% globally. Sixty-seven percent of LGBT respondents in the U.S. felt they were saving enough for retirement, compared to 32% globally; and 46% think they are on course to achieve around three-quarters or more of their retirement income needs in retirement, compared to 38% globally.