Because lesbian, gay, bisexual and transgender (LGBT) people have faced legal discrimination and societal prejudice, the Aegon Center for Longevity and Retirement decided to look into how well prepared the LGBT community is for retirement.
As Aegon says in its report, “LGBT: Retirement Preparations Amid Social Progress,” “Until recently, LGBT people were legally denied same-sex relationship recognition, limiting their ability to get married and start families. In addition, discrimination in the workplace has restricted the career opportunities, equal pay and employee benefits offered to LGBT people. These factors impact LGBT people throughout their working lives and in their retirement.”
Because in many countries it is considered inappropriate to ask people about their sexuality, Aegon limited its research to nine countries where this is less of an issue: the United States, Australia, Brazil, Canada, France, Germany and the Netherlands.
The research showed that LGBT people throughout the world tend to be younger than heterosexuals. In the U.S., 63% are Millennials, 18% Generation X, 14% Baby Boomers and 5% Silent Generation.
In the U.S., decriminalization of homosexuality was adopted nationwide in 2003, and same-sex marriage and adoption rights were granted nationwide in 2015. Compared to other nations, the U.S. has been the least progressive in this regard.
Among LGBT people in all nations, 52% are married or co-habitating, compared to 65% of heterosexuals. Forty-percent of LGBT people are single, compared to 22% of heterosexuals. “LGBT people lead more solo lifestyles throughout adulthood, and this is reflected in their aspirations for how they will spend their time in retirement,” Aegon says. “Fifty-five percent of heterosexuals expect to spend time with their family and friends, compared to just 45% of LGBT people.”
LGBT people in the U.S. are more likely to financially support children while in retirement than heterosexuals (66% versus 49%, and they are more inclined to provide support for aging parents (46% versus 23%).
The Aegon Retirement Readiness Index, based on attitudinal and behavioral measures, as well as required income replacement, measures peoples’ preparedness on a scale of one to 10. Among the LGBT people surveyed, the average was 5.9; in the U.S., it was the highest at 7.2. Among heterosexual U.S. workers, the ranking was 7.0, also the highest. The Aegon Retirement Readiness Index rankings for LGBT and heterosexual people were similar among all nations.
Thirty-six percent of LGBT workers in all nine nations think they will need to generate at least 80% of their current income in retirement, compared to only 32% of heterosexual workers.
Only 37% of LGBT workers say they are habitual savers, compared to 41% of heterosexuals. In the U.S., these figures are 61% and 57%, respectively. However, LGBT workers across the globe are more likely to have a written retirement plan (20% versus 16%; and 49% and 32% in the U.S.).
When people around the world have a written plan, their Aegon Retirement Readiness Index score rises, be they LGBT (8.1%) or heterosexual (8.0). Among those with an unwritten plan, the scores are 6.7 and 6.8, respectively, and for those with no plan at all, the score drops markedly to 4.1 and 4.6.
Analyzing data from the Federal Reserve, Aegon found that the median retirement savings for LGBT couples in the U.S. is 25% less than heterosexual married couples. The Aegon survey found that globally, LGBT households earn 8% less than heterosexual households.
“Due to discrimination throughout their working lives, older LGBT men and women are more likely to end up in poverty,” Aegon says. “This is supported by research conducted by the Movement Advacement Project and Sage in the U.S., where they found that nearly one-third of LGBT over the age 65 live at or below 200% of the federal poverty level compared to a quarter of heterosexual older adults.”
The median age that both LGBT and heterosexuals expect to retire is 65, and both groups expect to live a median of 20 years in retirement. However, among LGBT people who have already retired, 55% said they did so earlier than planned, compared to 45% of heterosexual retirees. Of this group, 39% of LGBT retiree said it was due to poor health, compared to 32% of heterosexual retirees.
Aegon suggests that employers provide employer-sponsored health and retirement benefits that offer LGBT employees the same access to spousal and family-oriented benefits as heterosexual employees. Aegon also suggests that employers establish employee resource groups for LGBT workers to learn about company policies and to connect with other LGBT workers.Aegon’s full report can be downloaded here.