For LGBTQ Millennials, less optimism
Straight peers trust more in American Dream.
The Millennial generation is known for its distrust of Wall Street and lack of self-assurance when it comes to money, investing and getting ahead.
But LGBTQ Millennials are even less confident than their straight peers when it comes to managing their finances and achieving the American Dream, according to a survey online brokerage TD Ameritrade provided exclusively to USA TODAY.
While many past surveys have compared the money habits of men and women, or married Americans vs. single ones, this study released during Pride Month analyzes the differences in how LGBTQ (lesbian, gay, bisexual, transgender, questioning) and straight Millennials view their financial situations.
While some similarities existed — both groups saved a similar percentage of their monthly incomes, were nearly as likely to invest in stocks and followed traditional career paths — there were also glaring disparities. Those differences suggest that LGBTQ Millennials are lagging behind their straight peers in key areas such as pay, financial literacy and confidence in their long-term financial futures.
Only about a third (35%) of LGBTQ Millennials surveyed said they were likely by age 40 to achieve the “stereotypical” American Dream — owning a home, getting married, having kids, landing a good job and investing in a 401(k). That compared with nearly half (49%) of straight Millennials.
LGBTQ Millennials were also less optimistic about reaching their financial goals and saw themselves as lacking the expertise to invest for the future.
Less than four in 10 LGBTQ respondents expected to “feel financially secure in retirement,” compared with half of straight Millennials. Similarly, only about a quarter of gay Millennials viewed themselves as “knowledgeable” about investing vs. one-third of straight Millennials.
And that lack of confidence is holding them back, says Lule Demmissie, man- aging director of retirement and longterm investing at TD Ameritrade.
“It is clear that when individuals feel less secure, it impedes their ability to improve their finances,” Demmissie says.
Part of the financial insecurity felt by LGBTQ Millennials may stem from the fact that they earn less money than their straight peers.
The survey revealed a sizable pay gap, with LGBTQ workers earning an average of $59,400 a year. That’s $8,400, or more than 12%, less than the average salary of $67,800 earned by straight Millennials.
And when it comes to household income, LGBTQ Millennials also fell short, with annual pay of $66,200 vs. $79,400 for straight Millennials. The wide discrepancy in household pay is likely due in part to the fact that straight Millennials are more likely to be married, raising the odds of a two-income household.
“The income gap,” Demmissie says, “can’t be overlooked. It’s real. Not imagined.”
In fact, taking home less pay each year occurs even though LGBTQ Millennials are more likely to supplement their income with so-called “side hustle jobs,” the TD Ameritrade survey found.
The young LGBTQ generation also is at a disadvantage when it comes to getting health care insurance from employers. Only about half (53%) get coverage at work vs. two-thirds (67%) of straight Millennials, the survey found.
What explains the wide gap in pay and the lack of confidence in money matters?
Kim Howard, owner and adviser at KJH Financial Services, a Newton, Mass., firm that works with LGBTQ clients, says it’s partly due to additional struggles the LGBTQ community faces.
At work, their sexual orientation “may
Less than four in 10 LGBTQ respondents expected to “feel financially secure in retirement,” compared with half of straight Millennials.
translate into a lack of mentors and advancement,” she explains. And fewer promotions result in lower pay, Howard adds.
But the financial disparities are not irreversible. “There are individual moves people can make to improve their lot in life,” Demmissie says:
❚ Gain more financial knowledge: An educated investor is a more confident one, she says. To boost your understanding of personal finances, “take advantage of free tools and resources online” that focus on basics, like how to build a diversified portfolio.
❚ Invest in your company’s 401(k): Getting started is the first step to achieving financial security.
❚ Know your value at work: Make sure you have done your homework and know what employers are paying for the type of job you currently hold or hope to land, she says.
TD Ameritrade surveyed more than
1,500 Americans between 21 and 37 (half who identified themselves as straight and half as LGBTQ) online from Feb. 21 to March 7. The statistical margin for error is plus or minus 2.5%.