10 Years After Obergefell v. Hodges, LGBTQ+ Couples Still Face Retirement Savings Hurdles

It’s been a decade since the Supreme Court legalized gay marriage in the U.S. In the years since, couples in the LGBTQ+ community have been able to access the retirement savings advantages of tying the knot, but still face unique hurdles.

On June 26, 2015, the Supreme Court ruled in Obergefell v. Hodges, requiring all 50 states to recognize gay marriages. In the wake of the ruling, LGBTQ+ couples were afforded the financial and legal protections that their straight, cisgender counterparts already benefited from, like tax deductions, health care coverage and Social Security benefits.

However, due to stigma, discrimination and other systemic factors, not all financial barriers to retirement savings have diminished in the intervening years. 

“Since same-sex marriage was legalized, it’s been commonly assumed that hurdles in retirement and estate planning for LGBTQ+ people no longer exist. However, there are still privately held biases and social stigmas that persist and create unique obstacles for LGBTQ+ individuals,” said Joseph Hahn, executive director of wealth planning and advice at J.P. Morgan Wealth Management.

LGBTQ+ Community Faces Unique Financial Hurdles Before Retirement

Many LGTBQ+ people consider themselves financially insecure and underprepared for things like retirement or emergency expenses. On average, more LGBTQ+ people live in poverty, make less per hour and accumulate more student loan debt than their straight, cisgender peers.

A larger percentage of LGBTQ+ adults live with chronic health problems or a disability than their straight counterparts, according to health care think tank KFF. As a result, medical bills and debt are a larger factor in retirement planning.

How Marriage Protections Helped LGBTQ+ Couples in Retirement Planning

Before Obergefell v. Hodges, LGBTQ+ couples weren’t afforded the same rights as their marriages weren’t protected by law in every state. One benefit of the ruling was that couples could take advantage of marital benefits that often help their straight peers in retirement planning.

Married couples can file taxes jointly, often incurring a higher deduction than single filers. Married individuals who lose a spouse can still file jointly in the year their spouse dies, as long as they don’t remarry in that year. Also, married individuals can inherit an IRA from a deceased partner in a tax-free rollover. 

Spouses without insurance can be covered under their spouse’s insurance, and non-working spouses can qualify for Medicare in retirement. Being married also means couples can receive spousal Social Security benefits, and spouses can transfer an unlimited amount of assets between each other without gift or estate tax consequences.

Are Changes Ahead?

Some LGBTQ+ community members fear Obergefell will be overturned like Roe v. Wade, another landmark decision. Overturning the Obergefell decision could have far-reaching consequences for LGBTQ+ people, such as increasing poverty and illness.

If the ruling is overturned, the country would likely return to a patchwork system, where only certain states legally recognize gay marriages, according to ALH Law Group. Advisors said that some couples are considering the possibility of the ruling being overturned in their retirement and estate planning.

“If the Supreme Court reverses the Obergefell ruling and gay marriage is no longer federally protected, then an LGBTQ+ client will have to save for retirement and health care expenses in a much more careful and proactive manner,” said Steve Branton, certified financial planner and Accredited Domestic Partner Advisor (ADPA).