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Study: LGBT Americans Better at Earning & Saving

Gay Americans deserve a pat on the back, and not just for continuing to overcome added hardships and prejudices. Members of the LGBT community are also significantly better at managing their money than average Americans, according to a new study by Prudential Financial, Inc.

The study found that individuals who identify as lesbian, gay, bisexual or transgender have higher-paying jobs, lower unemployment rates, more savings and less debt. Despite these findings, members of the LGBT community still feel they are less prepared than the general population to make good financial decisions, particularly because of unique legal challenges.

As expected, there are significant demographic differences within this one community. For example, transgendered individuals generally face more economic discrimination than other LGBT individuals, and lesbian couples are more likely to become parents than gay male couples.

Speaking as a whole, however, the LGBT community seems to agree on a few things. They highly value financial security and put more emphasis on saving for the future.

Financial Overview

According to the study, completed in August 2012, members of the LGBT community have a higher median income than the general population. The median household income of the survey’s 1,401 respondents was $61,500, nearly a quarter higher than the general population’s average household income of $50,000.

Researchers say this is the result of two factors in particular: LGBT individuals tend to be more educated, with 50 percent holding bachelor’s degrees; and LGBT individuals tend to live in states with higher median incomes as they also tend to be the most gay-friendly.

LGBT households are also good at saving money and paying down debt. LGBT households have a median of $28,000 in savings, about $6,000 more than the average American. They also have just $14,000 in debt, not including home loans, which is about $4,000 less than most Americans.

Additionally, only 7 percent of the LGBT community is unemployed and actively looking for a job. Evidence shows transgender people have the most trouble finding work, as their unemployment rate is 12 percent.

Financial Responsibilities & Spending Habits

LGBT individuals have much the same financial responsibilities as the general population, but they handle such responsibilities differently. Survey respondents reported taking care of children and parents, and saving for retirement as some of their many financial obligations.

According to the survey, nearly 10 percent of respondents were financially responsible for a parent or other elder. This number was fairly steady among all generations but varied greatly based on ethnicity. About 21 percent of Asian-American respondents, 18 percent of Hispanic respondents and 15 percent of African-American respondents reported caring financially for an elder.

LGBT parents have the additional expenses associated with caring for children. The survey found that 23 percent of lesbians and 7 percent of gay men have children, for a community total around 15 percent. Among those in Gen Y, currently aged 25 to 32, 11 percent have children and another 49 percent plan to have children in the future. However, those with children are well prepared financially, with a median household income of $71,100.

Because gay couples are typically prepared for financial obligations and remain relatively stable, they have more room in their budgets for discretionary spending. According to the study, 25 percent of lesbians and 40 percent of gay men spend more than $500 per month on discretionary purchases like dining out and entertainment.

Financial Concerns

Retirement tops the list of LGBT financial concerns. Members of the LGBT community, like those of the general public, are worried about not outliving their money as well as maintaining their current lifestyles through retirement.

However, gay individuals have a unique concern when heading into retirement. As same-sex couples often go unrecognized in a legal sense, such couples miss out on Social Security and pension survivor benefits. This can add to their worries and give them more reason to save.

All the worrying does have one good effect. High concerns cause gay individuals to plan for retirement ahead of time, with 78 percent saying they have already started saving.

Other areas of financial concern include the following:

  • Legal equality of LGBT Americans, which can affect taxes and accounts
  • The financial industry’s knowledge of and attention to LGBT needs
  • The national economy

Moving Forward

In years to come, the LGBT community will continue to adapt to situations and fight unfair laws. Gay baby boomers – from the era of the 1969 Stonewall riots – continue to reach retirement age. This will keep Social Security and retirement at the forefront of the LGBT community’s financial concerns.

Supporting a family will also take some precedence in the near future as more and more gay individuals plan to have children.

However, those identifying as LGBT are confident about the future. Overall, respondents reported being optimistic about LGBT rights, personal finances and the economy as a whole over the next two years.

While 61 percent stated the equality of LGBT Americans is currently in poor condition, about 65 percent reported that they have neutral or positive feelings about the issue’s progression over the next two years. Additionally, 31 percent of respondents said their household finances were currently in poor condition, but only 19 percent felt negatively about personal finances over the next two years.

As legislation becomes more inclusive and less detrimental to the LGBT community, members of the community should expect their legal and financial lives to improve.

Photo: Olga Besnard /

Katherine Pilnick is a writer for She educates readers about their various personal finance options. She is a graduate of New York University.

LGBT Americans better with finances

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