Queer and transgender people face unique challenges when it comes to handling their money.
According to the Center for LGBTQ Economic Research, LGBTQ consumers are 7% less likely to have a savings account than the general population. Additionally, an LGBTQ Community Retirement Confidence Survey shows that 63% of middle-income LGBTQ Americans say that their debt impacts their ability to save for retirement, compared to 43% of non-LGBTQ Americans.
Technology is catching up with these problems, though, and services are emerging to serve LGBTQ Americans’ particular financial needs.
Rob Curtis, cofounder of LGBTQ-specialized neobank Daylight, says, “There’s this feeling that our cis straight siblings are starting to think ahead to big life events, while we” — Curtis is gay as well — “are still stuck in our teenage years. We actually spend our 20s exploring our identities.” While non-LGBTQ people might be saving for a home or starting their families at that age, queer and trans folx are typically spending more money on experiences, community building, and mental-health resources, says Curtis.
Additionally, many LGBTQ elders find it difficult to retire comfortably. David Vincent, chief program manager at SAGE Advocacy and Services for LGBTQ Elders, says, “LGBTQ elders have experienced horrific discrimination. The older you get, or if you identify as a person of color, or a trans or non-binary person, it becomes even harder. If you’ve been fired from a job or underemployed because of discrimination, then you’re not getting what you might have been entitled to from earned Social Security income.”
Here are four specific financial hurdles the LGBTQ community faces, and how advances in financial technology are aiming to solve them.
1. Using a gender-affirming name on bank accounts
Many transgender people choose to legally change their name and gender marker during their transition. After their legal name change is finalized, trans people may use a traditional bank’s process to change their name on their bank accounts, debit cards, and credit cards.
However, this process might take months to complete, depending on how long it takes the local courts to approve gender-affirming name change paperwork, not to mention the wait for a new driver’s license and Social Security card. Additionally, some trans people might not be able to afford the court fees — about $750 on average — required to change their legal name in the first place.
To solve this problem, Curtis says, “Daylight offers a card with your name, irrespective of what your legal ID says. It’s often a first moment of empowerment for queer folx.”
2. Saving thousands of dollars for gender-affirming care
A 2021 study led by Michael Zaliznyak at Cedars-Sinai Medical Center shows that only 34 state Medicaid policies cover gender-affirming hormone therapy (including Washington, DC), while only 25 Medicaid policies cover gender-affirming surgeries.
A different study, led by Anthony N. Almazan at Harvard Medical School and The Fenway Institute, shows that gender-affirming surgeries are associated with improved mental health outcomes for trans people, including a 44% reduction in suicidal ideation from year to year.
This means many transgender and non-binary folx are meant to save and raise the money for life-saving hormones and surgeries on their own. Surgeries cost anywhere from $10,900 to $70,100, as reported by Insider in 2019.
To make saving easier, Daylight has features that enables users to split their savings into different categories. Curtis adds, “We have Ray, a non-binary virtual assistant designed by non-binary folx on our team, who guides people through the process. We discovered that the first pain point was the complexity of financial planning for gender-affirming care. Rather than just putting in a random savings goal, you have the opportunity to use benchmarks for facial feminization surgery, electrolysis, top, or bottom surgery.”
3. Building retirement savings
“Discrimination and underemployment have had devastating effects on our community,” says Vincent. “We don’t have the savings, retirement accounts, and pensions. We’re four times less likely to have children and age alone. There’s no safety net for LGBTQ elders. We’re statistically at a disadvantage.”
Built specifically for queer and trans elders, SageCENTS is a feature on SAGE’s website that allows elders to plan for retirement. The platform uses a simple chat feature with automated responses, designed for elders to be able to navigate the platform easily. Each time you answer a retirement-related question, you’re awarded 10 points out of 100.
4. Filling out end-of-life documents, like an estate plan
End-of-life documents, like an estate plan, a will, or a trust, can help your family members or the state distribute any monies or properties you own when you die. A healthcare directive ensures that you pick the person you trust the most with your healthcare decisions if you become incapacitated.
Without proper end-of-life documents, LGBTQ+ elders might be forced to place their healthcare in the hands of a blood relative or the state, if there are no living relatives, by default.
LGBTQ-specialized financial planner Ryan Klippel at Optas Capital says, “Let’s say, for example, if you’re an LGBTQ+ couple and you have a husband, girlfriend, or domestic partner that you’d prefer to make those decisions, but you’re not legally married to them. You have to identify them on your healthcare directive so that you can prioritize who it is you trust to make those decisions.”
SageCENTS makes it easy for LGBTQ elders to prepare these documents using their resource portal. The online platform educates LGBTQ elders on what documents to prepare to be able to create their end-of-life plan.
This article originally appeared in Business Insider on June 29, 2022.
