With a median annual income eight percent lower than heterosexuals, LGBT households are on the back foot when it comes to saving for retirement.
Breaking the stereotype often portrayed on TV and in the media of LGBT couples leading glamorous and expensive lifestyles; recent research* from the Aegon Center for Longevity and Retirement shows that LGBT households fall behind their heterosexual counterparts across the board when it comes to earning power.
The pay gap is even wider among LGBT women, a segment of society in which inequality in gender and sexuality intersect. Whereas the survey finds that women earn 12 percent less than men in general, LGBT women have a household income that is 17 percent less than that of heterosexual women and 27 percent less than heterosexual men. The lower household income of LGBT women is influenced by two factors: they are more likely to live in a household with a single rather than a dual income and likely to live with another woman. Their lower level of earnings also undermines their ability to save for their own retirement and often results in less access to occupational benefits such as workplace pension plans.
Taking advantage of benefits offered through the workplace
It is important to make the most of the benefits that are offered through the workplace to save for the future. Many employers offer company sponsored pension plans and other opportunities to save for retirement. Frequently, these benefits are tax advantaged and matched by contributions from the employer.
In fact, the 900 LGBT workers surveyed expect one-quarter of their retirement income to come from workplace retirement plans which is why it is important to make the most of this important source. Creating an environment where no employee is left behind in saving for retirement because of their sexual orientation or gender identity requires both on the part of employers and employees.
Over recent decades a great deal of progress has been made to remove discriminatory practices that existed in the past. According to a survey by Catalyst, 92 percent of Fortune 500 companies now have non-discrimination policies that include sexual orientation and 82 percent have polices that include gender identity. Where this has not been done already, employers can foster an LGBT-friendly work environment in which LGBT workers are offered equal pay and equal access to career opportunities. They can also provide health and retirement benefits that offer LGBT employees equal access to spousal and family-oriented benefits as heterosexual employees.
While legal protections in the workplace have improved - many companies have LGBT employee resource groups as a testament to a more open culture -- not all employees feel comfortable being open about who they are in the workplace. This can put them at a disadvantage in feeling confident about asking for equal treatment when it comes to pay and benefits. The consequences are that a lower income affords them less opportunities to save for retirement and not designating a partner as a beneficiary on a retirement plan can increase the risk that an LGBT household will have less money to live on in retirement. While the decision to be "out" at work is a very personal one, LGBT workers should investigate what benefits are available to them and consider how comfortable they are applying for them.
* The report is based on 900 online survey of people who self-identified as LGBT. The survey covers nine countries including: Australia, Brazil, Canada, France, Germany, the Netherlands, Spain, the United Kingdom, and the United States. The survey was completed by a representative sample of people who identified as heterosexual in the same countries.