A study released earlier this year by the American Society on Aging and the MetLife Mature Market Institute reveals that of the 1,200 LGBT baby boomers surveyed, only 21% of them agree that they are "on track" for saving for retirement. And as Todd Henneman writes in his August article for Workforce Management, retirement planning presents a unique set of challenges for LGBT individuals and couples. One notable challenge that is unique to gay and lesbian couples are the inability for surviving partners to receive Social Security survivor benefits, even if they had been in a state-recognized legal relationship, as the federal government only provides such benefits to opposite-sex couples.
One helpful tool that assists with retirement planning and beyond, is the use of an IRA Trust. Since 2006 all IRAs and 401K programs must allow you to name IRA Trusts as beneficiaries. An IRA Trust allows you to pass qualified plan funds for a person’s benefit (e.g. your partner), defer tax recognition of those funds, while adding a level of asset protection to the IRA or 401K funds given to the beneficiary. Such trusts allow LGBT couples to name their partner as beneficiary of their retirement plans upon the owner's death, while giving them the benefit of asset protection AND deferred tax recognition.
For a PDF copy of the American Society on Aging and the MetLife Mature Market Institute survey, click here.
