LGBTQ+ couples often navigate unique financial challenges and considerations. By understanding the realities that may affect you and your family, you can take proactive steps toward a stronger, more secure financial future.
Financial benefits of marriage for LGBTQ+ couples
Getting legally married is a personal choice. If you’re considering whether marriage is right for your relationship, it’s important to understand the potential financial benefits, including:
Social Security: Married couples are generally able to receive spousal and survivor benefits.
Health insurance: Spouses are often eligible to receive coverage from their spouse’s employee health plan.
Retirement accounts: Employer-sponsored plans, like a 401(k), automatically add spouses as the beneficiary, unless otherwise designated. Spouses who inherit a retirement account can defer distributions until age 73, while non-spouses are typically required to withdraw the full amount within 10 years.
Tax advantages: Married LGBTQ+ couples in the United States generally have access to the same federal and state tax advantages as married opposite-sex couples. Joint tax filing can lead to lower tax burdens, especially for couples with significant income disparities.
Read more: Start saving for your future with Ally Bank's smart savings tools
Estate planning specifics
Estate planning is important for everyone, but LGBTQ+ couples who are not legally married should be especially mindful because they do not have “next-of-kin” status. This means you cannot make medical decisions for one another in an emergency without a specific directive in place.
Unmarried partners must also provide written documentation to designate each other as beneficiaries on retirement accounts. Likewise, anyone who wishes to leave assets to an unmarried partner must explicitly state this in their Will.
By contrast, married couples benefit from combined gift and estate tax exemptions, may avoid capital gains taxes on home sales, and can transfer unlimited assets between spouses without federal estate tax. This simplifies estate planning and helps secure the surviving spouse’s financial future.
Planning for the family & future
Caring for your family, whether it’s children or parents, comes with its own costs.
Family planning costs
There’s no denying that children are expensive. LGBTQ+ couples often face additional costs depending on their path to parenthood. Options like adoption, artificial insemination or surrogacy can range from about $300 to over $150,000. Additional routes like foster-to-adopt programs or using a sperm donor can still cost a few hundred to a few thousand dollars.
Legal fees are another factor, especially when one or both parents are not biologically related to the child. Securing legal parentage through adoption typically adds $500 to several thousand.
Use the savings tools in your Ally Bank Savings Account, like buckets and boosters, to save for your future family. The earlier couples can begin to save, the better.
Caregiving considerations
Members of the LGBTQ+ community are often in charge of taking care of aging parents, partners, family and community. LGBTQ+ caregivers may face unique challenges, such as limited legal recognition of relationships or smaller biological family networks, which can increase the financial burden. Caregivers can also face financial risks such as lost income, minimized career opportunities and savings, and decreased Social Security and retirement benefits. Consider how you and your partner will navigate these situations if they come up.
Navigating unique healthcare challenges
Accessing and affording healthcare can be especially challenging for LGBTQ+ individuals. Many face discrimination from providers or insurers, which can limit access to necessary medications and drive up costs. Studies have shown certain health conditions are also more common in the LGBTQ+ community, and rates of mental health challenges are disproportionately higher. For any unexpected costs, building an emergency fund is one way to prepare.
Retirement planning considerations
Studies show LGBTQ+ individuals still face a pay gap. LGBTQ+ workers earn about 90 cents on every dollar compared to the average worker. LGBTQ+ people of color and transgender and non-binary individuals earn even less.
These wage gaps affect retirement savings. Same-sex couples are less likely to have one partner qualify for retirement benefits, making early and consistent saving — through a 401(k), IRA or both — especially important. Tax-advantaged accounts harness compound interest, one of the keys to building wealth in the long-term. Opening an IRA is easy and can be done in just a few minutes with Ally.
Financial planning with pride
Maneuvering through life’s biggest moments isn’t always easy. The earlier you can begin to save and invest for your objectives with an LGBTQ-friendly advisor or bank by your side, the more you can feel supported to reach your goals.
