Retirement

A fresh insight into LGBT financial attitudes

BlackRock |26-Aug-2016

BlackRock’s latest Global Investor Pulse Survey has revealed that LGBTs are less likely to have started saving for retirement in comparison to non-LGBTs.

 


Saving for retirement appears to be an ‘elephant in the room’ for British lesbian, gay, bisexual and transgender (LGBT) women.

BlackRock’s latest Global Investor Pulse Survey*, the largest study of investor behaviour in the world, has revealed the financial outlook for British LGBT men and women for the first time. The findings show that LGBTs are less likely to have started saving for retirement than non-LGBTs, with LGBT women much further behind. This helps to explain why only 40% of LGBT women feel positive about their financial future, which represents a lower average than the rest of the population and 55% of LGBT men.

When it comes to saving for retirement, survey findings present another gap between LGBT men and women. Close to six in 10 LGBT men have started saving for retirement, compared with just 47% of LGBT women. This inertia is similarly reflected in the significant cash piles that LGBT women are sat on, coming in at an average of over three quarters of their savings and investments. The same figure is much lower among LGBT men, at 57%. Non-LGBT women are similarly risk averse, with 73% in cash, while the average Brit holds a much lower figure of 67% in cash.

Meanwhile, we could all learn something from the investment mentality of LGBT male respondents, who have the most diversified investment portfolios across our sample.

Close to six in 10 LGBT men have started saving for retirement, compared with just 47% of LGBT women

Concerns about retirement are evident among both LGBT men and women. Almost half are anxious that they will outlive their savings in retirement – and the same proportion describe retirement planning as ‘confusing’. Close to six in 10 are concerned the state pension will not be sufficient to meet their future retirement income needs. Although their concerns have been flagged, inertia reigns once again because a large portion of LGBTs haven’t started saving for retirement.

One common aspect across LGBT and non-LGBT respondents is a misunderstanding of how much they need to grow their pension pot to meet retirement income expectations. On average, LGBTs would like to retire on an annual household income of £22,000, just £1,000 less than non-LGBTs. While LGBTs estimate that £194,000 will be sufficient to meet their income requirements, the pot they would need in reality is three times higher, at £665,000.

LGBT and non-LGBT groups face similar challenges when it comes to ensuring a comfortable retirement. Our findings suggest savers need to fundamentally rethink how they approach financial planning before it is too late. This is particularly true for LGBT women.

So how can LGBT women’s confidence be improved? Utilising every tax advantage available via a workplace or personal pension scheme and ISA represents a good starting point. With interest rates at historic lows, it would make sense to question how much cash is sat in bank accounts, earning next to little interest.

We believe implementing a regular savings plan, which also puts significant cash piles to work, could help LGBT women to feel more confident about their financial future and reach their goals much sooner. The time is ripe to take action.

Alex Hoctor-Duncan
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*Source: BlackRock, 2016

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of 17 August 2016 and may change as subsequent conditions vary.

BlackRock Investor Pulse survey, conducted in association with research agency Cicero Group from July to September 2015 amongst a nationally representative sample of 31,000 individuals in 20 countries aged 25 to 74 years old, of which 4,000 were UK residents. The results of this survey are provided for information purposes. The conclusions are intended to provide an indication of the current attitude of a sample of citizens in the UK to saving and investing and should not be relied upon for any other purposes. The opinions expressed are those of BlackRock as of November 2015 and are subject to change at any time due to changes in market or economic conditions. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any strategy.

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