The LGBTQ community has come a long way in the last few decades. Only 20 years ago, you could go to jail in some states just for having a same-sex partner. Today, same-sex couples can legally marry in all 50 states, and an employer can’t legally fire you because of your sexual orientation or gender identity. These are huge changes, and they’re worth celebrating.
Yet despite these gains, LGBTQ people continue to face unique challenges in American society. In many places, laws don’t explicitly ban anti-LGBTQ discrimination in areas such as housing or public accommodations. And even where they do, social prejudices remain.
Decades of discrimination have left LGBTQ Americans at a disadvantage when it comes to personal finance. Across the board, LGBTQ people face more financial challenges than our cishet (hetero and not transgender) peers. But we’ve overcome challenges before, and this is no different.
Some financial challenges are truly unique to the LGBTQ community. Some are due to anti-queer discrimination in areas such as housing and insurance. Others are related to high-cost medical procedures, such as gender reassignment surgery.
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However, many problems LGBTQ Americans struggle with, such as student loan debt, affect other Americans as well. They’re just more common in the LGBTQ community. For these problems, the solutions are often the same for us as for everyone else.
High Student Loan Debt
There are many reasons LGBTQ people may have more student loan debt than cishet people. For one, we don’t always get as much support from parents and other family members. And according to Student Loan Hero, many LGBTQ students have faced discrimination from lenders.
This heavy debt burden makes it harder for LGBTQ folks to get ahead financially. Many respondents in the Student Loan Hero survey say their debt has kept them from buying a home, buying their first car, or even moving out of their parents’ home.
How to Address It: There are many ways to deal with student loan debt. Student loan forgiveness or debt settlement could help you lower your total balance. Or you might be able to lower your payments through income-driven repayment, refinancing student loans, or student loan consolidation.
If these options don’t work, you can get out of debt faster by making your student loan payments your top priority. Cut your expenses as much as possible and throw all your extra cash at the balance until it’s paid off.
High Credit Card Debt
Credit card debt is also a big problem within the LGBTQ community. In a 2022 survey by Motley Fool, 56% of LGBTQ Americans reported having credit card debt, compared to 45% of all Americans. Their median debt load was also slightly higher: $3,000 as opposed to $2,700.
One reason for this higher debt load is lower average credit scores. LGBTQ Americans are less likely than the general population to have excellent credit and more likely to have only fair credit. This makes it harder to qualify for the best credit card interest rates.
Whatever the reason, high credit card balances pose a challenge for LGBTQ Americans. About four in 10 respondents in the Motley Fool survey said they felt unsure about how to pay off credit card debt.
How to Address It: Strategies for dealing with credit card debt are just the same for LGBTQ people as for our cishet peers. The first step is to make a budget that sets aside money each month toward the credit card balance.
Next, see if you can lower your credit card interest rate. Strategies include transferring balances to a lower-interest card, getting a debt consolidation loan, and negotiating with the lender. Also, if you can manage to boost your credit score, you could qualify for a better rate.
If you owe money on multiple cards, use the debt snowball method. Pay off one card, then roll the payment on that card over to the next balance. You can combine this method with debt snowflaking, using small windfalls to increase your payoff.
Income Inequality
Members of the LGBTQ community tend to earn less than cishet people. A 2017 survey by Prudential found that gay men and lesbian women reported lower average incomes than straight men and women. The Motley Fool survey also found that these groups were less likely to earn $100,000 or more.
For transgender people, the picture is less clear. In the Motley Fool survey, they were actually more likely than other Americans to report high incomes. Yet a 2021 McKinsey survey found trans workers earn significantly less than the general population.
There are many reasons for this earnings gap. Until the 2020 Supreme Court decision in Bostock v. Clayton County, discrimination in hiring was legal in many states. And even today, some employers continue to discriminate illegally against LGBTQ workers.
Also, until recently, the lack of marriage equality limited job opportunities for members of same-sex couples. If they wanted to share health benefits — or just avoid discrimination from employers and neighbors — they could only take jobs in states that recognized their union. And different career choices may also play a role.
How to Address It: One way to help close the income gap is to challenge anti-LGBTQ discrimination whenever you encounter it. If you think you have faced discrimination in the workplace, file a complaint with the U.S. Equal Employment Opportunity Commission.
This can help you reach a settlement with the employer — or sue them, if necessary. It also helps the LGBTQ community as a whole. The more employers get called out for anti-queer discrimination, the less likely they are to do it in future.
Your career choices also affect your earnings. If you’re choosing a career or considering a career change, factor potential earnings and job security into your decision. The best career fields on these measures include software development, health care, finance, and engineering.
Increased Financial Stress
In the Motley Fool survey, about two-thirds of LGBTQ Americans reported high levels of financial stress. About one in three said they worry about money every day. Their top concerns include keeping up with the cost of living and dealing with unplanned expenses.
Anti-LGBTQ discrimination can make these problems worse. Nearly half of all the survey respondents said they had faced discrimination in banking, investing, or financial services. For transgender respondents, that number rose to two out of three.
Another source of financial stress for LGBTQ Americans is the added burden of paperwork. Transgender people have to update every single document that identifies them to reflect their new name and gender identity. And that’s not always easy to do.
In the 2015 U.S. Transgender Survey, most respondents said all or some of their ID documents did not list their preferred name and gender. About one-third of them said they had been harassed, assaulted, or denied benefits because of this.
Paperwork is also a challenge for same-sex couples with children. They must take extra steps to make they’re recognized as parents. Having both names listed on a child’s birth certificate isn’t enough. The non-biological parent (or parents) must either legally adopt the child or get a court order to make them a legal parent.
How to Address It: When dealing with discrimination, your best defense is to know your rights. By law, lenders cannot refuse you credit, discourage you from applying for credit, or charge you higher interest based on your sexual orientation or gender identity.
If a lender does any of these things, complain. You can talk to a higher-up at the financial institution or report the problem to the authorities. The Federal Trade Commission (FTC) explains how.
The solution to paperwork problems depends on where you live. Research your state’s laws to learn exactly what documents you need and how to get them. Organizations like GLBTQ Legal Advocates and Defenders (GLAD) and the National Center for Transgender Equality offer resources to help with this.
For other causes of financial stress, the best cure is to get your finances in order. Make a budget, build up an emergency fund, and make sure you have enough insurance. And if you’re married or partnered, talk to your partner about money and make sure you’re on the same page.
Housing & Mortgage Discrimination
In a 2018 Experian survey on LGBTQ finances, 11% of respondents said they had paid more for housing as a result of discrimination. Some paid more in rent because of discrimination from landlords. Others paid higher mortgage interest rates because of discrimination from lenders.
But outright discrimination isn’t the only reason members of the LGBTQ community pay more for housing. We’re also more likely to seek out LGBTQ-friendly areas to live in—and unfortunately, these areas have higher housing costs.
A map from Movement Advancement Project shows the best and worst U.S. states for LGBTQ families. When you compare that map to one showing the cost of living across U.S. states, you can see that the most queer-friendly states are also among the most expensive. The cheapest states, by contrast, tend to be the ones most hostile to the LGBTQ community.
How to Address It: Anti-LGBTQ discrimination in housing is illegal. The Fair Housing Act prohibits discrimination in housing based on sex. And according to the Bostock decision, that includes gender identity and sexual orientation.
So if you’re facing high housing costs due to discrimination, report it. For cases of mortgage interest discrimination, report the lenders to the FTC. And for rent discrimination, file a complaint with the U.S. Department of Housing and Urban Development (HUD).
Dealing with high housing costs in queer-friendly places is trickier, but not impossible. There are exceptions to the rule that LGBTQ-friendly cities and states are pricey. For instance, Buffalo, one of the most affordable cities in the U.S., is in New York, one of the most queer-friendly states. And Illinois, also in the friendly category, has a below-average cost of living.
Health Insurance Obstacles
Based on the Motley Fool survey, LGBTQ people are less likely to have health insurance than other Americans. Those who do have insurance are much more likely to buy a health plan on the open market, rather than getting one through their workplace.
Coverage for partners is also a problem. Three in 10 respondents say their employer-sponsored insurance won’t cover their partner.
On one hand, marriage equality has opened up workplace coverage to many same-sex spouses. However, it has created a new challenge for partners who choose to remain unmarried. Now that same-sex couples are free to wed, many employers have stopped offering domestic partner benefits to those who do not.
How to Address It: If you need insurance for yourself, visit Out2Enroll. This site helps LGBTQ people get health coverage through Obamacare health exchanges. It can guide you through the enrollment process and also help you challenge health insurers who discriminate.
If you need coverage for a nonmarried partner, check the laws in your state. Only five states specifically recognize domestic partnerships. However, many city and county governments in other states do as well. Check FindLaw to see if yours is among them.
Health Care Access & Medical Costs
LGBTQ people face many unique challenges related to health care. For one, men who have sex with men are at higher risk for certain diseases, such as HIV/AIDS.
Today, there are new tools to protect yourself from this disease. For instance, PrEP is a drug that can help prevent the spread of HIV. But it’s very expensive without insurance, and it can be hard to find even with it. Some doctors flat-out refuse to prescribe it.
A newer threat to the gay community is monkeypox. The 2022 outbreak of this disease caught the U.S. completely unprepared. Tests, vaccines, and treatments for it are all in short supply.
For transgender people, one big issue is access to gender-affirming surgeries and treatments. This is a huge expense, sometimes $100,000 or more. But in many states, insurers aren’t required to cover it. In fact, in a few states, the law actually bans access to gender-affirming health care for trans people under 18.
Another problem for older LGBTQ people is long-term care. Family care isn’t always an option because many of them don’t have spouses or children. In addition, most elder care facilities are religious organizations, which can make them unwelcoming places for LGBTQ residents.
At the same time, LGBTQ people must often shoulder the burden of caring for elderly family members. In the U.S., many people rely on their adult children for care, and this job often falls to those who have no kids of their own. This is a source of both financial and emotional stress.
How to Address It: For starters, it’s important to be out to your doctor. They need to know about your sexual orientation and gender identity in order to address your specific health needs.
If you’re not comfortable talking about these issues with the doctor or doctors you have, look for more LGBTQ-friendly health care providers. The Gay and Lesbian Medical Association maintains a database to help with this. The Human Rights Campaign also rates health care facilities on LGBTQ inclusion.
For specific health care needs, look for resources online. Out2Enroll has a PrEP Locator to help you find clinics that dispense the drug. If you’re not insured, see if your state has a PrEP assistance program to help cover the cost.
Finding a monkeypox vaccine is harder because the vaccine rollout has been so glitchy. Your best bet is to do an Internet search on “get monkeypox vaccine” with the name of your city or state.
GLAD offers resources on dealing with health insurers for gender-affirming care. If you don’t have insurance, check out ways to finance the cost, such as credit cards, personal loans, HELOCs, or loans from friends and family. The CareCredit card, which is specifically for medical expenses, could be a good option.
Finally, make a plan for dealing with long-term care costs. Look into long-term care insurance, annuities, and life insurance with long-term care provisions. To find queer-friendly elder care facilities, look for providers certified by SAGECare.
Financial Planning
Basic finances pose a challenge for many members of the LGBTQ community. Less than half of Motley Fool survey respondents said they were confident about their ability to handle basic financial matters such as paying off debt, doing taxes, or investing in stocks.
The Prudential survey also found a financial literacy gap. On average, LGBT respondents had fewer financial products than the general population. They were more likely to feel like they needed help with finances, yet less likely to work with a financial advisor.
How to Address It: There are lots of resources online to improve your financial literacy. Here on MoneyCrashers, you can find advice on budgeting, taxes, investing, paying off debt, improving your credit, and starting an emergency fund — and it’s all free.
If you need more help, seek out an LGBTQ-friendly financial planner. PridePlanners is a group of Financial Planning Association members who are part of or allied to the LGBTQ community. You can also search the National LGBT Chamber of Commerce site or rely on word of mouth.
Family Planning
Starting a family can be complicated for LGBTQ people. The good news is, there are many routes to parenthood, including adoption, artificial insemination, IVF, and surrogacy. The bad news is, all of these cost money — sometimes a lot of money.
Paying these costs now could jeopardize your retirement savings later. If you spend $150,000 to conceive a child at age 35, that could cost you a million dollars or more in retirement savings by the time you reach age 65, based on historic returns on long-term investments.
How to Address It: First, explore all your options for starting a family — including their costs. Adopting a child through the foster care system is usually cheaper than domestic or international adoption. In some places, it’s entirely free.
If you’re trying to conceive a child, getting sperm from a known donor tends to be cheaper than buying it at a sperm bank. Collecting the sperm and doing the insemination at home makes it cheaper still. And intrauterine insemination is much cheaper than IVF.
Remember to factor in the costs of establishing legal parentage through the court system. Some options include stepparent adoption and parentage judgment. The cost for this can be anywhere from $100 to $3,000.
Once you’ve settled on a method, make a budget. If you can’t cover all the costs up front, look into financing options such as loans and CareCredit. And don’t forget to plan for family leave when you welcome your new child to the family.
Retirement Planning
As a group, LGBTQ people have less money saved for retirement than the general population. There are several reasons for this, including:
- The Income Gap. Lower earnings during your working years adds up to less savings when you reach retirement age.
- Higher Costs in Retirement. The states with the most LGBTQ-friendly laws also tend to have a high cost of living.
- Delayed Access to Spousal Benefits. Prior to marriage equality, same-sex married couples couldn’t share retirement benefits such as pensions, workplace retirement funds, and Social Security.
- The Impact of AIDS. At the height of the AIDS crisis, many gay men didn’t prioritize saving for retirement because they didn’t expect to live that long.
How to Address It: The best retirement planning advice for younger LGBTQ people is the same as for their cishet peers. Save as much for retirement as you can, starting as early as you can. In particular, make sure to take advantage of any employer match that’s offered for your 401(k) plan.
If you’re already nearing retirement, look for ways to reduce retirement expenses. See if you can downsize to a smaller home or relocate to a less expensive area. If you still can’t find a way to cover your retirement costs, consider delaying retirement or continuing to work part-time.
A financial wellness program called SAGECents provides free access to educational materials and financial tools designed specifically for LGBTQ elders. It can help you evaluate your finances and find LGBTQ-friendly financial advisors.
Estate Planning
According to the Motley Fool survey, LGBTQ Americans are less likely than other Americans to have a will and other estate planning documents. Yet there are many reasons why these documents are even more crucial for LGBTQ people than for everyone else.
For one, many same-sex couples have chosen not to marry. The problem is, if your relationship has no legal recognition, your partner does not have the rights of a spouse. If you die without a will, they inherit nothing. They’re also not recognized as a spouse for purposes of making medical or financial decisions.
Another problem is the many couples who formed domestic partnerships or civil unions prior to marriage equality. Some of them then moved to other states that don’t recognize these unions as legal. That leaves them with no legal protection if one of them dies without a will.
On the other hand, you can’t always assume that a civil union isn’t legally binding. If you had one with a former partner and never officially ended it, your ex could have a legal claim on your estate.
Even for married couples, there is always a risk that relatives could challenge the legality of your marriage. And if the Supreme Court overturns the ruling making same-sex marriage legal everywhere, your state could too.
A final complication is the legal status of children. If you have children not biologically related to you, they may not be legally yours, even if your name is on the birth certificate. You need to become their legal guardian to make sure they remain in your care if your partner dies.
How to Address It: First, check the legal status of your relationship. At the same time, sure you’re not legally bound to a former partner. If you are, cut those ties officially.
Then, even if you are legally married, create legal documents to back it up. Make a will in favor of your spouse and your children if you have any. Establish yourself as the kids’ legal guardian, not just in the will but also with a stepparent adoption or parentage judgment. That confirms you are related and your assets will go to them in case of any dispute.
Along with the will, create power of attorney and health care proxy documents. These documents give your spouse the right to financial and medical decisions for you if you can’t do it. And finally, decide whether you want an advance health care directive, or living will.
Final Word
Some challenges LGBTQ people face, such as medical expenses, are unavoidable. If you and your partner are the same sex, you simply can’t conceive a child without medical assistance. Likewise, if you’re transgender, it takes medical intervention to make your body match your gender identity.
However, many other problems are either legal or social in nature. And those can be changed.
One thing you can do to make life easier for all LGBTQ Americans is to ask Congress to support the Equality Act. This bill calls for all states to grant the same civil rights to all their citizens. It outlaws anti-LGBTQ discrimination in housing, health care, and public services.
As for social views, those are already changing. According to Pew Research, in 2002 just over 50% of Americans were accepting of same-sex relationships. Today, that number is over 70%. People with homophobic or transphobic views are a minority, but a loud and influential one.
The best way to change the views of that minority is to be out and proud. Research on prejudice shows that the more contact people have with members of any group, the harder it is for them to stay prejudiced against them. In the long run, more exposure to LGBTQ people will bring more acceptance — and that’s a good thing for all Americans.