5 important financial planning considerations for LGBT+ people

February is LGBT+ History Month, and this year’s theme honours the contributions that LGBT+ people have made to medicine and healthcare.

At the same time as celebrating this, the event aims to shed light on the health inequalities faced by this community, both today and historically.

As well as health inequalities, LGBT+ people may experience financial inequalities throughout their lifetimes. Read on to learn about these challenges and how financial planning can help you to overcome them and achieve your goals.

1. LGBT+ people earn less than their peers on average

Your income can have a significant influence on your ability to save for the future and build wealth, and the Independent reports that LGBT+ people are more likely to earn a lower salary than their non-LGBT+ peers.

The data shows that 24% of LGBT+ young adults make less than £19,999 a year, compared to 16% of non-LGBT+ young adults.

Average salaries varied for different LGBT+ identities; lesbians and asexual people were the most likely to be earning less than £19,999 a year.

Overall, LGBT+ young adults were consistently paid less than their non-LGBT+ counterparts.

2. Starting a family can be more expensive for same-sex couples

Same-sex couples who would like to start a family may have several options available to them, but each will typically carry a high financial cost.

According to a report from Professional Adviser, those who opt to undergo in vitro fertilisation (IVF) could face costs of around £5,000 for each round.

The report shares that the chances of success with IVF are often slim: a woman under the age of 35 has a 32% chance of falling pregnant after a round of IVF, dropping to 4% for women over the age of 44. As such, you may require multiple rounds of IVF.

Couples who choose to start a family using surrogacy may face even higher costs: up to £100,000.

These costs are in addition to those of raising a child, including childcare and one or both parents needing time away from work to care for the baby, which can affect your income. If this is something you’d like to do, a financial planner can help you to create a plan for covering these costs and mitigating their effect on your overall financial wellbeing.

3. LGBT+ people are more likely to struggle to afford the basics in retirement

Retirement planning can be complex for many, but for LGBT+ people it has some added challenges. Research shared by Scottish Widows has discovered that LGBT+ people are more likely to struggle to afford the basics in retirement than the general population.

Around 44% are on track for a retirement income that the Pensions and Lifetime Savings Association considers to be below the minimum needed to afford basics such as food and heating. This is compared to 35% of people across the general population. Moreover, 36% of LGBT+ people are not a member of a pension scheme, compared to 30% of the general population.

It may be helpful to consult a financial planner to help you ensure that you are taking the most appropriate steps for you to save for the retirement lifestyle you’d like.

4. LGBT+ people are less likely to be married or in a civil partnership, which has implications for Inheritance Tax

The Office for National Statistics reports that LGBT+ couples are less likely to be married or in a civil partnership than opposite-sex couples. Those who aren’t don’t have access to the associated tax and estate planning benefits.

This means that it can be sensible to think carefully about your estate plan to ensure you are able to pass on your assets to your loved ones as tax-efficiently as possible.

This might include:

• Writing a will
• Completing an “expression of wish” form for your pension
• Creating a Lasting Power of Attorney.

A financial planner can help you to ensure that you take the most sensible steps that will enable you to fulfil your ambitions.

5. Transgender people who plan to transition may face higher healthcare costs

Gender dysphoria is the feeling of unease or dissatisfaction some feel as a result of their biological sex not reflecting their gender identity. Some people who experience this may choose to “transition”; that is, undergo treatment or surgery to change their body so that it reflects their identity.

While it is possible to be referred for support and treatment on the NHS, waiting times can be long. The BBC reports that transgender people in the UK have had to wait up to seven years for an initial assessment. As such, some people may seek private treatment, often at a high cost.

According to GoFundMe, private gender reassignment treatment (also known as “gender confirmation treatment”) can cost between £10,000 and £100,000. This sizeable sum could have a significant impact on your long-term financial wellbeing and your ability to save for the future.

It may be helpful to factor this cost into your financial plan to help you cover these costs alongside any long-term goals you may have.

Get in touch

If you would like to learn more about how we can help you to achieve your long-term financial goals, please get in touch. You can email us at info@harperlees.co.uk or call 01277 350560. We’ll be very happy to help.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.