Lesbian, gay, bisexual, transgender, and queer or questioning (LGBTQ+) people have seen many historical, societal, and legal changes in recent years that grant them more equality and protection. Despite these advancements, they still face unique challenges, including financial ones.

Whether it is legal disparities that leave LGBTQ+ populations financially unprotected or personal finance concerns, it is important to recognize these issues. Defining the problems will help bring attention to them and build ways to address them.

This article will provide an overview of the financial issues that LGBTQ+ people face with regard to marriage and family planning, debt, insurance, and retirement—due in part to the history of discrimination against them, but also because of the unique financial challenges that come with being an LGBTQ+ person.

A History of Discrimination

It wasn’t until 2015 that gay marriage was legalized in all 50 states. And only in 2020 did the U.S. Supreme Court bar discrimination in employment decisions in relation to a person’s sexual orientation or gender identity. But these are just some of the concerns facing LGBTQ+ people. Over time, many notable events have occurred that have helped and hurt members of LGBTQ+ communities. Below are some of the key laws and moments that have shaped the world that they face today.

• 1969: The Stonewall Uprising occurred at the Stonewall Inn, a gay bar in New York City. This uprising is often cited as a catalyst for the beginning of the LGBTQ+ rights movement.
• 1974: The Equal Credit Opportunity Act (ECOA) of 1974 prohibits discrimination in lending based on race, color, religion, national origin, sex, marital status, age, or the receipt of public assistance, but omits any mention of sexual orientation or gender identity.
• 1977: Harvey Milk is elected to the San Francisco Board of Supervisors. He was one of the first openly gay elected officials. He was assassinated after serving less than a year in office.
• 1988: The Fair Housing Act, originally passed in 1968 and amended in 1988, protects Americans from discrimination based on race, color, national origin, religion, sex, family status, and disability, but omits any mention of sexual orientation or gender identity.
• 1994: “Don’t Ask, Don’t Tell” is instituted, a policy that banned openly gay and lesbian members of the military from serving in the U.S. armed forces.
• 2009: Then-President Barack Obama signs a Presidential Memorandum that allows same-sex partners of federal employees to receive benefits, but it does not cover health benefits.
• 2010: The “Don’t Ask, Don’t Tell” policy is repealed, allowing gay and lesbian people to serve openly in the U.S. military.
• 2015: Same-sex marriage is legalized in all 50 U.S. states by the U.S. Supreme Court ruling in the case of Obergefell v. Hodges.
• 2019: The Fair and Equal Housing Act of 2019 was introduced in the U.S. Senate. The bill would have provided protection from discrimination in credit lending in relation to sexual orientation and gender identity. It did not receive a vote. To date, the bill has not been reintroduced.
• 2020: The U.S. Supreme Court ruling in the case of Bostock v. Clayton County bars discrimination in employment decisions in relation to a person’s sexual orientation or gender identity.
• 2021: The Consumer Financial Protection Bureau (CFPB) clarifies that the ECOA includes protections for LGBTQ+ people, making it illegal to discriminate on the basis of gender identity or sexual orientation.
• 2023: The American Civil Liberties Union (ACLU) is currently tracking 491 anti-LGBTQ bills in state legislatures across the U.S. These laws target freedom of speech and expression, the safety of transgender students, and access to healthcare, among other rights.

The monumental changes outlined above give a glimpse of the struggles LGBTQ+ communities have endured and the victories they have achieved. Because some rights and protections, such as marriage and workplace protections, have only been granted in recent years, many members of LGBTQ+ communities are still impacted by the long period of time without them.

These milestone events have had substantial ramifications for LGBTQ+ people in relation to finance. Whether it was leaving out protections against discrimination or granting rights (such as health coverage and marital status tax and other benefits), these events shaped the financial future for LGBTQ+ people. Here's a look at the major financial issues that LGBTQ+ people may encounter.

Marriage and Family Planning for LGBTQ+ People

The right to legally marry drastically changed the landscape for LGBTQ+ people. With the right to marry came spousal benefits through Social Security, pensions, and work. Married couples receive important tax benefits, including eligibility to file taxes jointly and the ability to avoid a tax burden when receiving payouts from a deceased partner’s retirement plan.

With or without marriage, LGBTQ+ people face financial challenges when it comes to family planning. There are many options for an LGBTQ+ person to start a family—including adoption, in vitro fertilization (IVF), surrogacy, and artificial insemination—all of which are costly.

For example, adoption can cost $20,000 to $70,000, depending on whether the adoption is done domestically or internationally. IVF can cost $13,500 to $21,000 or more, and thousands more per attempt.

Depending on the type used, surrogacy can cost from less than $60,000 to more than $250,000. Paying these costs is difficult for almost any couple or individual. The difference is that almost all LGBTQ+ people face these obstacles when choosing to start a family. This can cause financial and emotional strain.

On top of this, some states do not allow gestational surrogacy or have proposed bills to outlaw IVF. As a result, financial challenges can be coupled with legal obstacles.

LGBTQ+ People and Debt

On average, LGBTQ+ people carry more student loan debt than their cisgender/heterosexual peers. According to Student Loan Hero, they hold $16,000 more in student loan debt.

The majority (90%) of LGBTQ+ people ages 18 to 40 who have student debt have federal student loans, and about half of them owe anywhere from $10,000 to under $50,000. About 32% owe less than $10,000 and 16% owe $50,000 or more.

Various factors can lead to increased educational debt, including a lack of support from parents unwilling to fund their LGBTQ+ child’s education.

With the often heavier student loan burden come financial struggles in other aspects of life: 41% of LGBTQ+ people reported being unable to buy a house due to student loan debt, and 23% reported being unable to buy their first car.

Debt of various types appears to be top of mind for many in the LGBTQ+ communities. A survey of LGBTQ individuals from Experian reports that the second biggest financial concern, noted by 20% of respondents, is paying off debt. The same survey found that 70% of respondents report using credit cards to purchase necessities.

Insurance Issues for LGBTQ+ People

A survey conducted and analyzed by Connecticut-based LIMRA and its affiliated nonprofit, Life Happens, found that LGBTQ consumers have a lower rate of life insurance policy ownership than all Americans—38% vs. 50%.

This is a concern in part because 45% of those making financial decisions in LGBTQ households acknowledged that if the primary wage earner in the family died, the family would struggle financially within six months; 30% felt they would face hardships in just three months.

One of the reasons LGBTQ respondents noted they didn't buy life insurance was that it competed with other financial priorities, according to LIMRA.

Health insurance represents a unique challenge for LGBTQ+ people. According to the Movement Advancement Project, “41% of [the] LGBTQ population lives in states with insurance protections that include sexual orientation and gender identity,” while 44% of LGBTQ+ people in the U.S. live in states "that do not have LGBT-inclusive insurance protections."

In addition, healthcare for LGBTQ+ people is often threatened, such as when laws are passed that allow discrimination in healthcare against LGBTQ+ people. On his first day in office in January 2021, President Biden issued an executive order that expanded nondiscrimination protections for LGBTQ+ people, which included healthcare.

Health insurance issues include gender confirmation surgeries. A massive expense for transgender people, these often cost in the tens of thousands of dollars—they can exceed $100,000—and are not always covered by insurance.

Paying for these surgeries with or without insurance presents a challenge for transgender people, causing some to turn to fundraising sites such as GoFundMe.

LGBTQ+ People and Retirement

When it comes to retirement, LGBTQ+ people have specific hurdles to overcome. To start, as a group they have less saved for retirement. One of the reasons for this is that LGBTQ+ people make less money than non-LGBTQ+ people, according to a study by Prudential.

The Prudential report shows that gay men make $56,936 on average, while straight men make $83,469 on average. It also finds that lesbian women make $45,606 on average, while straight women make $51,461.

(Note that the figures for lesbian vs. straight women's earnings conflict with other studies—including a 2014 analysis of 29 studies—which have concluded that lesbian women tend to earn 9% more on average than heterosexual women.)

According to the Prudential report, bisexual men and women may fare better, making, on average, $85,084 and $35,980, respectively. However, a report from the UCLA School of Law Williams Institute concluded that bisexuals tend to earn less than gay or straight people.

In its annual retirement survey of workers in 2021, the Transamerica Center for Retirement Studies found significant differences between the retirement readiness of LGBTQ+ and non-LGBTQ+ workers. For example, LGBRTQ+ workers were more likely to work part-time and have a lower household income, less likely to be offered a 401(k) or similar plan by their employers, and less likely to feel very confident about their ability to retire with a comfortable lifestyle.

What's more, the survey found that LGBTQ+ workers have significantly less household retirement savings ($43,000) than non-LGBTQ+ workers ($99,000), as of late 2020. And only 19% of LGBTQ+ workers had saved $250,000 or more in total household retirement savings vs. 32% of non-LGBTQ+ workers.

Until recently, many LGBTQ+ people faced additional retirement issues when it came to the lack of marriage equality. Social Security, pensions, and other retirement plans could not be transferred (or if they could be transferred, not easily) between partners because they were not legally married.

For example, until the Pension Protection Act of 2006 (PPA), unmarried beneficiaries were forced to take any retirement funds in the form of lump-sum payments, not only creating enormous tax burdens for the beneficiary but also preventing them from receiving continuous payments over time, which could end up being more beneficial for the recipient.

Individual retirement accounts (IRAs) and other retirement plans favor those who inherit from a spouse (as opposed to being a non-spousal beneficiary). Thus, the ability to legally inherit this money as a person’s spouse is extremely important.

Also, members of LBGTQ+ communities often have different needs in retirement. Many LGTBQ+ people seek out accepting parts of the country as locations for their post-employment years. This often means living in cities where living and housing costs can be much higher than the national average, making retirement more expensive for LGBTQ+ people.

The Bottom Line

LGBTQ+ communities face many financial challenges, some of which are outlined here. But recent changes—like the Supreme Court ruling in 2020 that granted federal nondiscrimination protections to LGBTQ+ people, along with the 2021 executive order from President Biden that expanded these protections—point toward progress being made.

Advocates push for further change, such as passing the Equality Act, which would expand the Civil Rights Act of 1964 and several other laws and would impact LGBTQ+ people “across key areas of life, including employment, housing, credit, education, public spaces and services, federally funded programs, and jury service.” The House passed this legislation in February 2021, and it awaits action in the Senate.

As advocacy for LGBTQ+ rights continues and members of the community receive more legal protections, the financial burden that LGBTQ+ Americans face may begin to decrease.