Lesbian, gay, bisexual and transgender Americans are in fairly good financial health, but they continue to have concerns about retirement and equality of financial rights, according to a new Prudential study, "The LGBT Financial Experience."
The median household income of the LGBT community was $61,500, which is significantly above the median U.S. household income of $50,000. Although gay men report earning more than lesbians individually, $49,000 vs. $43,500), when it comes to household income, lesbians, who are more likely to live in dual-income households, have higher household income ($63,700 vs. $62,300). While the combined household income of gay male couples is the highest overall at $103,000, these couples constitute a minority (19 percent) of the LGBT community.
"We explored the financial landscape for LGBT Americans to better understand the financial challenges and concerns of the community as a whole, as well as same-sex couples and LGBT parents," said Charles Lowrey, chief operating officer, U.S. Businesses. "While we found the LGBT community to be largely optimistic about the future, like most Americans the community was affected by the recession and is very concerned about being able to retire."
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Prudential developed a Financial Confidence Index, which it applied as part of this survey. The LGBT community scored a 48 out of 100, meaning they are reasonably confident about their finances and the economy. Gay men reported being more confident than lesbians, and Gen Y was more confident than the Baby Boomers. The financial services industry's attention to the specific financial planning needs of LGBT Americans ranks lowest on the Financial Confidence Index.
Life insurance, employer-sponsored retirement and savings accounts were the top three financial products used in the LGBT community. More than half of those surveyed said they own a life insurance policy, with almost two-thirds of legally recognized couples having a policy. In contrast to the general public, lesbians are just as likely to own life insurance as their male counterparts. Close to one-quarter of Boomers own individual stocks and 10 percent of legally recognized couples own annuities.
Nearly four in 10 LGBT individuals and nearly half o LGBT couples in a legally recognized relationship work with a financial professional, which is similar to the general population.
Underscoring financial planning challenges related to the legal status of relationships, 61 percent of LGBT individuals see their financial planning needs to be different from the general population.
Although the LGBT community does not need financial professionals to be part of the community, 75 percent say it is important that a financial professional understands the unique needs of the community. Despite this, almost nine out of 10 LGBT individuals say they have never had a financial professional contact them about their specific LGBT financial planning needs.
"We recognize that the LGBT community faces a number of unique challenges when it comes to financial planning," says Sharon Taylor, senior vice president, human resources. "We hope that the insights from the study will enable both Prudential and the financial services industry to better meet the LGBT community's financial needs."
At a time when Baby Boomers are retiring in significant numbers, the top financial concern among the LGBT community is retirement. While most LGBT Baby Boomers describe themselves as financially secure, approximately one-third say they are falling behind or on the edge financially, and almost half are not confident that they will not outlive their savings or be able to maintain their standard of living in retirement.
"The LGBT Financial Experience" also highlighted one of the key drivers of concern about retirement – the legal status of LGBT relationships, which can have a significant impact on financial planning. LGBT respondents are very concerned about the lack of Social Security or pension survivor benefits for same-sex couples, and legislation that negatively affects LGBT rights. Tax treatment, benefit inequality and inheritance rules for same-sex couples closely follow as major issues.
"The LGBT Financial Experience" 2012-2013 Prudential Research Study was conducted by Community Marketing Inc. of San Francisco, Calif., which surveyed a diverse group of 1,401 Lesbian, Gay, Bisexual and Transgender (LGBT) Americans aged 25-68 from urban, suburban and rural communities throughout the 50 states in August 2012.
Prudential Financial, Inc., a financial services company, has operations in the United States, Asia, Europe, and Latin America.
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