Members of the LGBTQ+ community face a broad range of financial challenges that heterosexual people do not need to deal with—and often are not even aware of. The media often portrays the "typical" gay couple as a high-earning pair of professionals. This characterization is not the reality for the majority of LGBTQ+ Americans.
According to a recent survey by TD Ameritrade, about 35% of LGBTQ+ millennials (those born between 1980 and the late 1990s) say they are unlikely to enjoy the "American Dream." This dream includes buying a home, getting married, having kids, finding a good job, and investing in a 401(k) before they hit age 40.1 This survey also revealed that the average annual income for an LGBTQ+ household is about $13,000 less than the average yearly income for a straight household.
Unfortunately, this means that LGBTQ+ households may find it harder to build wealth and pass this wealth down to subsequent generations. This problem may persist if left unaddressed. So, what is behind this generational wealth gap, and how may it be closed?
Causes of the Generational LGBTQ+ Wealth Gap
One of the most common causes of the generational wealth gap is the systematic exclusion of LGBTQ+ individuals from family inheritances. Even with the nationwide legalization of same-sex marriage removing one obstacle to inheritance, many parents refuse to accept their child's sexual orientation. They may exclude them from their estate as a result.
And this exclusion does not just occur at the end of a parent's life. LGBTQ+ youth are given less financial support for college than their straight peers and therefore incur a larger amount of student loan debt—an average of $16,000 more.2
By starting their adult lives with this extra student debt—and without the parental financial support that many other young people take for granted—members of the LGBTQ+ community may struggle to find the economic baseline from which others started.
Tackling the Generational Wealth Gap
No one person has the power to reverse this systemic struggle. However, there are some steps you might take to make wealth transfer easier for yourself and for those who come after you.
● Be honest and straightforward about your finances. After spending years hiding who you are, it may also be tempting to hide your financial struggles. However, by revealing them, you may find that others are dealing with similar situations. Take advantage of the advice and guidance from those around you who have been in your situation.
● Seek out diversified financial content. A lot of financial content is created by—and targeted at—cisgender white men. By looking into financial content created by black, brown, and LGBTQ+ individuals, you may be able to amplify these voices and help foster greater inclusion.
● Make provisions for future generations. Consider setting up your estate plan to donate to causes that benefit LGBTQ+ individuals and communities, such as college scholarships, youth shelters, or even giving to LGBTQ+ people you know.
While navigating a generational wealth gap is challenging, some things you might do include having a financial literacy discussion with your loved ones and taking concrete steps that may help combat the economic challenges that affect LGBTQ+ individuals.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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1 LGBTQ Millennials: "American Dream" tough to achieve by 40, survey reveals eu.usatoday.com/story/money/2018/06/06/lgbtq-millennials-financial-survey/659754002/
2 Average LGBT Student Carries $16K More Debt Than Straight Peers www.advocate.com/business/2018/7/23/average-lgbtq-student-carries-16k-more-debt-straight-peers