The U.S. Supreme Court decision legalizing same-sex marriage one year ago led to widespread optimism that the lives of LGBT people would improve.

The sentiment was particularly strong in regard to same-sex couples: The ruling would avail them of federal marriage rights and privileges enjoyed by their heterosexual counterparts.

That indeed has been a result for a segment of gay men and lesbian women who have tied the knot. But as a recently released report of Prudential Financial makes clear, the financial picture for married couples, and the broader LGBT community, is decidedly mixed.

Prudential’s survey, “The LGBT Financial Experience: 2016-2017,” first explored in a recap of a Prudential press briefing on the study by sister publication ThinkAdvisor, shows that a greater percentage of LGBT people feel greater financial confidence. But compared to four years ago, many among them also are experiencing financial-induced stress.

The concerns they share mirror in part issues — pay inequality, workplace insecurity, pension survivor benefits — that LGBT Americans have long contended with.

The concerns can also be attributed to broader macroeconomic challenges confronting the general population: stagnant wages, the outsourcing of manufacturing jobs to overseas competitors, as well as technological change that is disrupting entire industries.

See also:

4 ways that marriage equality changed Social Security

LGBT: The emerging market closest to home

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Eye on the methodology

Conducted by Chadwick Martin Bailey last May, the Prudential online survey gathered answers from 1,376 LGBT people and 503 individuals from the general population. Among the more intriguing numbers are demographic statistics about the participants.

A majority of the LGBT respondents identify themselves as bisexual. Of these, 6 in 10 are women. In contrast, just 15 percent of the women surveyed describe themselves as lesbian. That compares with nearly 1 in 3 (32 percent) of men who are gay.

Not surprisingly, more than 7 in 10 (72 percent) of the respondents are white, a proportion that reflects their representation in the larger population (71 percent). Ethnicity aside, millennials (ages 25 to 37) make up nearly half (47 percent) of the LGBT interviewees.

How to account for their disproportionate share, given that boomers (ages 52-70) are nearly as large a demographic group, but account for just 28 percent of the respondents? The answer, panelists noted during the Prudential briefing, held in New York City on June 23, stems in part from the fact that millennials feel less constrained about “coming out” to reveal their sexual orientation.

“People are coming out much younger because the world allows them to, which is fantastic,” said Prudential panelist and Reuters Money Editor Lauren Young.  “And because millennials are much younger, they can start planning at a much younger age. We all know about the power of compounding; if you start planning for retirement in your 20s versus your 40s or 50s, you’ll be ahead of the curve.”

The report’s authors acknowledge that the relative youth of the survey respondents — 45 percent of lesbians and 58 percent of bisexuals are millennials — skew the results; findings about the financial health and preparedness of the LGBT population reflect to a greater degree the issues and concerns of those in their 20s and 30s.

The report also flags gender differences — notably in respect to income — both within the LGBT community and relative to the larger population. Bisexual men earn (on average) a whopping 136 percent more than bisexual women ($85,084 vs. $35,980); and gay men earn 25 percent more than lesbian women ($56,936 vs. $45,606).

Additionally, heterosexual men earn significantly more than both homosexual men ($83,469, vs. $56,936, respectively); and heterosexual women ($51,461).

Related: Your boss wants to know if you’re gay

Challenges LGBT people face

Members of the LGBT community, irrespective of age or other differences, share a host of financial issues and concerns. One big one: the failure to prepare adequately for retirement or financial emergency.

Take product ownership. Compared to the general population, fewer LGBT people hold the following the insurance and investment products:

  • Savings accounts (40 percent/LGBT vs. 47 percent/general population).

  • Employer-sponsored retirement plans, such as 401(k)s and 403(3)b plans (35 percent vs. 40 percent).

  • Individual retirement accounts (18 percent vs. 30 percent).

  • Employer-sponsored pension plans (18 percent vs. 23 percent).

  • Mutual funds (15 percent vs. 21 percent).

  • Individual stocks (18 percent vs. 23 percent).

  • Life insurance (42 percent vs. 54 percent).

  • Long-term care insurance (10 percent vs. 12 percent).

What’s more, fewer LGBT people have a will or estate plan (19 percent vs. 26 percent for the broader population). In the wake of the Supreme Court decision, one might speculate this difference will narrow over time, but not necessarily: Tax considerations aside, federal recognition of marriage has freed same-sex couples of wealth transfer planning (e.g., establish complicated trusts) that otherwise would be needed to protect assets absent that recognition.

But the Prudential panelists noted marriage entails its own financial challenges. Among them: retirement planning, caring for children, securing healthcare insurance or Social Security benefits and, not least, tax planning.

“Many same-sex couples are surprised to learn the first time they file a joint return that they’re in a different income tax bracket,” said Reuters’ Young. “A growing number of them also are having to pay the alternative minimum tax, which used to be assessed only on the wealthy.”

Differences between the LGBT community and general population are evident, too, in the financial concerns survey respondents share. One-third of LGBT people, for example, say they’re “making ends meet,” but are struggling. That compares to less than a quarter (23 percent) of the general population. More of those within the LGBT than the general population also say they’re “unable to keep up” in paying the bills (8 percent vs. 4 percent).

Compared to their counterparts in Prudential’s earlier 2012 survey, more LGBT people this year also are straining to cover living expenses (33 percent vs. 25 percent, respectively); or are failing to do so (8 percent vs. 6 percent).

Glenda Testone, a panelist at the Prudential press briefing and executive director of the LGBT Center in New York (pictured in the panel, second from right), said the issue is particularly acute for members of the transgender community.

“Many transgender people who visit our center have extreme financial and economic challenges,” she said. “One-third of transgender people of color are trying to live on less than $10,000 per year — well below the poverty line. Women in LGBT community, particularly those with low incomes, also are facing financial issues.

“These are key reasons why we launched two programs: (1) a women’s economic opportunity program and (2) a transgender economic opportunity program,” she added. “These programs aim to give women and trans people the tools they need to build a foundation on which to support themselves financially.”

The Prudential survey also observes dips between 2012 and 2016 in the percentage of LGBT people who say “I’m not part of the 1 percent, but things are good” (11 percent in 2016 vs. 20 percent in 2012); and who state “I’m living modestly, paying the bills and staying independent (33 percent in 2016 vs. 47 percent in 2012).

The 2016 report does have one silver lining: More of them say “I’m doing what I want, when I want, where I want (15 percent in 2016 vs. 2 percent in 2012).

Related: LGBT and modern families: What advisors need to know

Impact of the Supreme Court decision

The survey also highlights tangible gains in one key metric that contributes to financial security: the percentage of LGBT people who are married and living with their spouse. Since 2012, the marriage rate has increased three-fold, to 30 percent from 8 percent.

The gains are apparent among:

  • Gay men (17 percent in 2016 vs. 6 percent in 2012).

  • Lesbian women (25 percent vs. 9 percent, respectively).

  • Bisexual men and women (41 percent vs. 12 percent).

Result: financial planning with fewer pitfalls. Half of the LGBT people polled by Prudential say that federal and state recognition of their same-sex partnership has “simplified their finances.” This compares to less than 1 in 7 (13 percent) in 2012.

“Having the fundamental right to marry has begun to simplify the financial lives within the LGBT community,” said Kent Sluyter, CEO of Individual Life Insurance and Prudential Financial Advisors and briefing panelist (pictured below). “Unfortunately, [financial] issues still cast a shadow on the ability to attain true financial security.”

Financial barriers and concerns of the LGBT community show up in other survey findings. The top five for all LGBT people and same-sex couples include:

  • Loss of your job or your spouse’s partner’s job (42 percent and 48 percent, respectively).

  • Inflation (40 percent for both groups).

  • Existing debt that you or your spouse/partner will have to pay off (39 percent and 40 percent).

  • Lack of job opportunities (37 percent and 35 percent).

  • Lack of knowledge or lack of ability (37 percent and 36 percent).

Prudential’s Sluyter said insurance and financial service professionals are being called on as never before to help LGBT people tackle these issues. And, irrespective of their own sexual orientation, they can do so successfully if they’re culturally in sync with this diverse demographic group.

“You don’t have to be an advisor in the LGBT community to advise LGBT individuals,” he said.  “But you do have to be sensitive to their issues and needs.

“Raising the level of awareness and sensitivity to these issues is something that financial institutions like Prudential need to be working on,” he added. “Members of the LGBT community want to work with a company — and advisors — who are seen as supportive of social equity issues like [nondiscriminatory] hiring practices and who will champion the LGBT community’s causes.”

 

Related: Why tax planning for same-sex couples is still more complex than it should be

See the charts beginning on the next page for additional highlights from the Prudential Financial survey:

(Click on chart to enlarge.) 

As this chart shows, the amount of debt for LGBT respondents in 2016 is fairly stable compared to 2012. Then and now, nearly half hold less than $10,000 in debt (not including mortgages and home equity loans). 

(Click on chart to enlarge.) 

LGBT respondents overwhelmingly say that they need more information and experience in order to tackle their financial goals — including goals they feel are extremely important. They are much more likely than general population respondents to say that they need to gain more knowledge or experience across all goals and across generations — although the difference is particularly stark within millennials and Generation X.

(Click on chart to enlarge.)

When asked what will make it harder to achieve their financial goals, around 4 in 10 LGBT and general population respondents say potential job loss and inflation. However, LGBT respondents are even more concerned than general population respondents about the potential for certain forces to be a hindrance, including debt, lack of job opportunities, lack of ability to afford a good financial advisor and wage inequity because of discrimination.

(Click on chart to enlarge.)

Top causes that would impact LGBT respondents’ decision to work with a firm are whether it supports: Equal job rights for LGBT employees; gender equality (e.g., equal pay for women); LGBT employee benefit equality; and racial equality. For each of these, around half of the LGBT respondents surveyed said they would be “much more likely” to work with a company if it publicly supported the cause. 

(Click on chart to enlarge.)

Despite relative stability in terms of income and debt, fewer LGBT respondents surveyed in 2016 (compared to 2012) have started saving or investing for retirement; have insurance; or have a will or estate plan. This is true even among the older generations, and among lesbians, gay men and bisexuals.