Tips to secure financial future for LGBTQ
We dedicate part of our financial planning practice to helping the expat LGBTQ community, because we ourselves know very well what it feels like to be discriminated. It's time to both celebrate progress towards equality and raise awareness of the challenges many LGBTQ people continue to face.
When you think about those challenges we face, retirement planning may not be the first thing that comes to mind.
Only half of millennial LGBTQ people experience their financial position as positive, while the older generations (Gen Z and baby boomers) are only slightly more optimistic at 59%. Many LGBTQ people face a retirement gap, meaning their savings and planning for their golden years are not enough for a comfortable retirement.
Here are five steps you can take so you have a safety net when you're ready to take the plunge into retirement.
1. Dealing with debt
The LGBTQ community has higher debt than the rest of the population anyway, and 4 out of 5 LGBTQ households report that carrying a high debt burden makes managing household finances difficult. For example, 51% of millennials say their student debt forced them to put off saving for retirement.
If credit card debt weighs heavily on you, you may want to consider a debt consolidation loan with a lower interest rate. Consolidating your balance into one payment will make it easier to tackle what you owe and pay it off faster. Once that weight is lifted, you can work on your other financial priorities.
2. Start planning early
Don't put off making deposits into an individual retirement account just because you don't think you have enough money to make it worth it. If you invest even just a few hundred dollars a month, you can make it a habit - and you can increase your contributions if you can put more money aside.
If you're not sure where to start, get in touch with a professional LGBTQ financial consultant: firstname.lastname@example.org
3. Protect your health and financial security
LGBTQ people face both discrimination and barriers when it comes to health care that prevent them from receiving the same level of care as everyone else. This leads to a lower quality of life and poorer health outcomes. Meanwhile, an outstanding medical bill can turn your financial situation upside down.
To protect your finances and health, consider affordable health insurance and make sure you're protected if you ever need medical attention.
4. Build your wealth
Now that you have a solid foundation with a plan to manage your debt and save for retirement, think about your financial gift.
LGBTQ often don't have the same access to support that others can count on. Individuals who identify as "queer" say they could count on family and friends for financial support before coming out, but that number dropped to 20% after coming out. However, there are still plenty of ways to get ahead financially.
Buying a home is a good investment to make sure your family has security and, along with your retirement account, can be an important part of your retirement.
Another good option is building an investment portfolio and you don't need thousands of dollars to get started. You can turn your pennies into a diversified portfolio in no time.
5. Prepare your beneficiaries for success
Whether you have children or want to leave something to your chosen family, it's important to make sure all of your assets go to the right people. Start by drafting a will to ensure your estate ends up in the right hands.
You will also want to think about purchasing life insurance, especially if you own a home. This ensures that your family is financially taken care of when you are gone.
Other ways to save money or increase your budget
All the preparations can seem overwhelming, but if you have a solid strategy in place, you can bridge the retirement gap, and if you need more money to give yourself a little extra pampering, you have the following options:
- Lower your insurance premiums. When was the last time you shopped around for a better car insurance price? If it's been a while, it could cost you more than an additional $1,000 each year. Shop around to make sure you're paying the best possible rate. And while you're at it, use the same technique to save hundreds on health insurance too.
- Tackle your student debt. If student loan payments take up a large portion of your monthly budget, consider refinancing your loan at a better rate. Not only can it save you money every month, but it can also help you pay off your debts years earlier.
What is your spending pattern?
Knowing where your money is going helps you make better financial decisions.