Why Financial Planning Can Be Difficult for the LGBTQ Community

Every investor is different... Different financial goals. Different investment focuses. Different values. Different lifestyles. These differences shouldn't interfere with an individual's financial planning, as financial plans should always be catered to the individual. But for many in the LGBTQ community, financial planning can come with its own hurdles.

Even though same-sex marriage was legalized in the U.S. several years ago, the LGBTQ community still faces many unique issues regarding finances. Yes, married LGBTQ couples can now file joint tax returns, utilize their spouse's health insurance, and receive death benefits. But many individuals face workplace discrimination and pay inequality, with lesbians earning nearly $6,000 less than heterosexual women and gay men earning more than $26,000 less than heterosexual men.[1]

In addition, LGBTQ-friendly communities are typically located in more urban areas, and living in cities is undoubtedly more expensive than living in more suburban or rural areas. According to Hotels.com, San Francisco is known for being the largest LGBTQ community in the U.S., with New Orleans, Portland (Oregon), New York City, and Orlando rounding out the Top 5 cities for LGBTQ communities.[2]

San Francisco is the third most expensive city to live in, as a two-bedroom rental apartment can cost more than $4,000 per month. The median price for a three-bedroom, two-bath home in San Francisco will also cost you upwards of $1.2 million.[3] If you're paying that much in rent or a mortgage to live in a community where you feel safe and accepted, your ability to save and plan for the future can be limited.

Many LGBTQ couples also want to have a family, which can come with its own set of expenses. Fertility treatments, surrogacy, and adoption costs add up quickly.

U.S. News & World Report revealed that domestic adoption costs can range from $20,000 to $45,000, and international adoption fees are often between $20,000 to $50,000. But that's not all; there are other fees related to adoption, including payment for an attorney, home study, family profile, travel, and adoption consultants. And when adopting a newborn, there could be expenses associated with medical expenses, insurance, and transportation for the pregnant mother.[4]

If an LGBTQ couple opts for surrogacy, the costs are even higher: between $100,000 and $150,000. These costs could even triple if there are fertilization issues or multiple pregnancies. The high price tag is due to several fees associated with surrogacy, including medical, insurance, legal, agency, and surrogate. Fertility treatments like IVF can cost between $8,000 and $30,000 alone.[5]

Considering salary hurdles, the high cost of living, and fees associated with starting a family, it's not too surprising that a Prudential survey revealed that more than 40% of LGBTQ respondents were struggling financially. The survey also pointed out that many respondents haven't started saving or investing in their retirements since they're more focused on the here and now.

At Nicollet Investment Management, we understand that all of our clients face different financial challenges. It's why we're dedicated to providing customized financial planning, as we strive to create a financial plan that can meet your needs right now, as well as help you achieve your future goals. If you're interested in learning more about our customized solutions, give us a call today. We'd love to talk to you about your financial goals and dreams—and how we can help you achieve them.

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[1] https://www.forbes.com/sites/brianthompson1/2018/06/13/planning-for-lgbtq-couples-distinct-financial-challenges-persist/?sh=646e59773320

[2] https://www.hotels.com/go/usa/best-lgbt-friendly-usa

[3] https://www.nerdwallet.com/cost-of-living-calculator/city-life/san-francisco-ca

[4] https://money.usnews.com/money/personal-finance/family-finance/articles/what-adoption-costs-and-strategies-to-pay-for-it

[5] https://money.usnews.com/money/personal-finance/family-finance/articles/how-much-surrogacy-costs-and-how-to-pay-for-it