LGBTQ Retirees Struggle with Financial Security

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Editor's Note: This story originally appeared on SmartAsset.com.

Though recent years have seen tremendous strides in areas of social and financial equality for LGBTQ Americans, the history of marginalization that the community faced has left many older LGBTQ people struggling with financial security, according to a new study from the Illinois chapter of the AARP and SAGE Publications.

“This groundbreaking research is a sobering reminder of how events of the past still play a role in the way LGBTQ adults 50+ live today,” said Mary Anderson, AARP Illinois Director of Outreach and Advocacy for Northern Illinois. “Because of decades of discrimination, LGBTQ older adults fall behind their non-LGBTQ counterparts when it comes to having health care they need, retirement savings, and caregiving support as they age,”

The many struggles and historical setbacks against this demographic, including the same-sex marriage bans, have impeded older adults from benefiting from Social Security survivor benefits, in particular.

Financial Struggles of Older LGBTQ Americans

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One of the chief struggles of older LGBTQ people in the U.S. is simply financial insecurity. According to this study, nearly one-third of older LGBTQ people live at or below 200% of the federal poverty line, meaning that they are living on less than $25,760 for a single person or $34,840 for a couple. The study notes that poverty rates are even worse for older people of color, people who are at least 80, bisexual older people and transgender older people.

Historic discrimination plays a direct role in these struggles. Around 83% of older LGBTQ people rely mostly on Social Security to live. Due to discriminatory marriage laws that existed for much of U.S. history, many of these people do not qualify for Social Security survivor benefits. They also may not have access to their partner’s retirement or pension benefits, or even be able to access their partner’s assets.

Other Struggles of Older LGBTQ Americans

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Getting adequate health care can be a struggle for any older person in America, but there are specific problems the LGBTQ community deals with as they age. Many have trouble finding competent and inclusive health care options and suffer mental health issues because of a lifetime of discrimination and social isolation.

Caregiving is another struggle. Many don’t have the ability to rely on their family for help, turning instead to their “chosen family.” The study found that around 75% of older LGBTQ adults are concerned about having an adequate support system as they get older.

How to Boost Retirement Savings Beyond Social Security

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Depending on your financial situation, Social Security will only cover a part of your expenses in retirement. Here are four strategies to help boost your retirement savings and extend your Social Security benefits:

Maximize your IRA or 401(k). Retirement planning often starts at work. If you have access to a 401(k) or similar workplace retirement plan, use it, starting right now. A recent study from Vanguard says that roughly one-third (34%) of Americans are leaving free money on the table by saving below the employer match.

Put money into a health savings account. An HSA lets you invest money for future medical expenses, while getting special tax breaks — your contributions reduce your taxable income and your money grows tax-free. In January 2021, $82.2 billion was invested in 30 million HSA accounts. This was a 25% year-over-year jump in assets and a 6% jump in total accounts.

Guarantee an additional income stream with an annuity. Annuities are insurance products that pay out the full amount of principal and interest over a specific period of time. You can delay taxes on earnings and sometimes extend it to beneficiaries. An annuity could also allow you to take Social Security benefits at a later age and therefore maximize your benefit. A financial adviser could help you invest in an annuity later in life as you continue working and if you have other retirement income.

Delay your Social Security benefits until age 70. Waiting until full retirement age will allow you to get 100% of your retirement benefits. However, by retiring at age 70, you could get 132% of your regular monthly benefit amount. So while you will get fewer Social Security benefit checks in your lifetime, they would be one-third larger.

Bottom Line

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Financial insecurity is a serious concern for LGBTQ Americans as they age. Though the legal and social situation for this community has improved in recent years, a history of systemic discrimination still weighs heavily. The fact that LGBTQ people couldn’t get married legally for many years, for instance, leaves many without access to the Social Security survivor benefits and other marriage benefits that opposite-sex couples have.

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