Study shows LGBTQ Americans in need of retirement strategy guidance

A recent study from Massachusetts Mutual Life Insurance Co. (MassMutual) revealed lesbian, gay, bisexual, transgender, queer or questioning (LGBTQ) Americans say they want to preserve their retirement savings but tend to take bigger risks when it comes to investing.

Forty-two percent of LGBTQ retirees and pre-retirees said the should become more conservative with their money as they come closer to retirement, as opposed to 28 percent who said they prefer a more aggressive investment approach.

However, 65 percent of those respondents say their investment strategy is actually more mixed, rather than conservative, compared to 52 percent of the general population — 31 percent of respondents admitted they could be taking more risks than they should be, compared to 22 percent of other retirees and pre-retirees.

“MassMutual’s study shows that many LGBTQ retirees and pre-retirees may benefit from consulting a financial advisor about their retirement investment goals, something less than half currently do, and may benefit from help leading into retirement and securing their finances through retirement,” said Catherine Cannon, Head of Personal Markets at MassMutual.

“Of those respondents in our study who do work with a financial advisor, six in 10 say their advisor has encouraged them to change their investment mix and 87 percent of those folks were advised to become more conservative as they enter retirement.”

Both the general population and LGBTQ retirees expect their retirement savings to last 25 years, however overall, LGBTQ retirees plan to retire later than the general population. In addition, the same respondents said they expect their retirement income will last as long as they need, which is two years fewer than the general population.

LGBTQ retirees also expressed more confidence than the general population that they will be financially prepared for retirement. However, despite this confidence, stock market volatility and downturn in the stick market are worrisome for the community as they approach retirement. About 75 percent of respondents expressed this concern, with 27 percent say they are “very concerned.”

72 percent of the general population expressed concern with regard to market volatility, while 21 percent said they are “very concerned.”

According to the study, LGBTQ respondents show greater comfort in taking investment risk, with just 20 percent willing to accept “below average” or “low investment returns” in exchange for greater safety. Overall, respondents seem to seek a balance between growth and preservation.

“One strategy that may help some LGBTQ retirement savers balance investment goals such as growth and safety is the use of target date funds (TDFs) when available through their employer’s 401(k) or other retirement savings plan,” Cannon said.

“TDFs automatically reallocate retirement savings between equities and fixed-income, gradually growing more conservative as the investor approaches and enters retirement. Some newer TDFs also are more personalized to investor’s individual needs, including a greater focus on managing assets in accordance with an investor’s individual risk tolerance.”