it comes to retirement savings, mostly because of federal laws.
As same-sex couples are increasingly being granted rights similar to those in
traditional marriages, many will be at a comparative disadvantage as they enter
retirement.
A study by the Williams Institute at the UCLA School of Law says gays and
lesbians will have less retirement income and fewer ways to pass savings on to
their families after their death. Merrill Lynch, a unit of Bank of America,
helped fund the report.
A large share of same-sex couples will be entering retirement in the next two
decades, just as states open marriage and civil-union laws. There are about 1.2
million gay people living with a same-sex partner in America, according to the
most recent U.S. Census.
Inequality in retirement savings needs to be addressed, says Naomi Goldberg,
author of the survey, “The Impact of Inequality for Same Sex Partners in
Employer-Sponsored Retirement Plans.”
The study, citing census statistics, shows that traditional couples earn an
average of 4% more in combined household retirement income each year compared
with same-sex couples. It claims, however, that the statistic tells only part of
the story.
Same-sex surviving spouses can’t directly receive the balance of their
deceased spouse’s 401(k) plans. Because they must begin making withdrawals
immediately, they face a higher tax rate and the loss of accruing interest.
Surviving same-sex spouses also pay higher estate taxes.
“The bulk of these inequalities are a direct result of the Defense of
Marriage Act (DOMA), which forces the federal government to treat same-sex
couples differently than married couples when it comes to retirement savings or
estate taxes after death,” Goldberg says. DOMA was passed under President Bill
Clinton.
There have been changes that have benefited gays and lesbians. The Pension
Protection Act of 2006 gives surviving partners of same-sex relationships access
to retirement assets.
Corporate America has shown an increased willingness to recognize same-sex
couples. Companies such as Boeing, Coca-Cola, Pepsi, Nike, and Microsoft offer
the same benefits to straight and gay couples.
The federal government has proved less open-minded with its employees.
Same-sex couples are unable to receive the same health care, retirement, and
family-leave benefits. Congress is debating a bill sponsored by Sen. Joe
Lieberman (I-Conn.) and Sen. Olympia Snowe (R-Maine) that would change that. The
move could affect as many as 35,000 government workers at a cost of $56 million
in 2010.
The federal government’s lack of recognition for same-sex marriages—even when
legally sanctioned by such states as Massachusetts, Connecticut, and Iowa—has a
broader impact. Surviving same-sex spouses and partners are unable to tap Social
Security spousal or survivor benefits, losing out on an estimated $5,700 a year.
Goldberg says female couples are at a particular disadvantage.
“A female same-sex couple is more likely to be on public assistance, more
likely to continue working older in life, and they receive less in overall
income,” she says. “Women are more likely to move from job to job, whether it is
because of taking time out for kids or otherwise. When you have two women who
are creating a household together, that disadvantage is compounded.”
The study found that female same-sex couples over age 65 have an average of
$3,615 less income than straight married couples.
Joe Mont is a writer in Boston.
