Financial planning clients come to me wondering two fundamental questions: 1) Am I doing okay? and 2) Am I worse off than other people you see?
Both are fair questions. The first because most people value security and safety in their relationship with money. The second because, as human beings, we like to compete with each other. I’m especially guilty of this. My family and friends would tell you that I’m the most competitive person they know. So I love comparing myself to all kinds of statistics — finances, health, happiness, etc.
Still, it’s ironic answering the first question often negates the need to think about the second. Your answer to “Am I doing okay?” depends on what you want to accomplish and whether you can achieve your goals. And if you’re doing okay, however you define it, you don’t need to worry as much about other people.
Even so, comparing yourself to others can be useful if it gives perspective on your current situation and where you hope to be down the road.
After a frank discussion on income and wealth last week on my Facebook page, today I would like to offer some income and wealth perspective. I want to do this specifically for those in the LGBTQ community since we are less likely to be highlighted in mainstream comparisons.
We’ve already established several differences in income and wealth in between LGBTQ Americans and their heterosexual counterparts. But do you know where you stand within the LGBTQ community?
The Income Spectrum
The most recent income and wealth data I’ve seen comes from The 2016/2017 LGBT Financial Experience study conducted by Prudential. Prudential first did the survey in 2012 and updated their findings in 2016, interviewing a nationally representative sample of 1,376 LGBT and 503 general population respondents.
Here are the average income figures from their study:
- Bisexual Women: $35,980
- Lesbian Women: $45,606
- Heterosexual Women: $51,461
- Gay Men: $56,936
- Heterosexual Men: $83,469
- Bisexual Men: $85,804
It’s not surprising given our world-wide pay gap that all men, no matter what sexual orientation, out-earn women. But I was a little shocked that men who considered themselves bisexual earned the most, while bisexual women earned the least. Another stat of note from the study showed that 23% of single LGBT respondents earned less than $15,000 per year.
The Prudential study also highlighted the income for couples. It found that 33% earn between $50,000 and $100,000 and nearly a quarter make over $100,000. There’s more information about income for couples in the American Community Survey (ACS) data:
- 14.1% earn less than $35,000
- 10.4% earn between $35,000 and $49,999
- 17.3% earn $50,000 to $74,999
- 15.4% earn $75,000 to $99,999
- 42.8% earn over $100,000 or more
The ACS survey found that the median household income from all same-sex couples ($87,300) was higher than that of opposite-sex married couples ($82,923). But again, the gender pay gap seems to play a role here. Male couples had median household income of $98,486 and the female couples were $79,494.
A NY Times article, “The Most Detailed Map of Gay Marriage in America,” also found that same-sex married couples earned more than opposite-sex couples. However, rather than using census data, The Times used information from an August 2016 Treasury Report based on 2014 income tax returns, which may be more accurate.
Specifically, the article found male same-sex couples earned an average of $176,000, which was $52,000 more than married lesbians and $63,000 more than married straight couples. In addition, same-sex married men with children averaged gross income of $275,000 — more than double that of opposite-sex and lesbian couples. Notice that these income figures are significantly higher than the ACS data study.
You have to dig into the statistics to really understand what these numbers show. First, as the article points out, most same-sex couples live along the coasts and in urban areas, where wages tend to be higher. When comparing the same zip codes, in turns out that heterosexual couples actually earn more than same-sex female couples, which coincides with the ACS data.
Childcare also affects the statistics. The Treasury report found same-sex female couples were four times more likely to have children than same-sex male couples. Combine the tough career trade-offs of child rearing with already lower wages, you can see why the gap between male and female same-sex couples is so large.
Lastly, married couples, in general, are likely a wealthier group. Consider that the average cost of the a wedding last year was $35,229, more than half of the median household income in 2016. Clearly, the people who get married are the ones who can afford to do so. As a result, the income of this select group might not reflect the true picture of the community as a whole.
This is also true for opposite sex couples. ACS data shows the median income for married opposite-sex couples is $82,293 and unmarried opposite-sex couples is $58,879
A Look at Other Aspects of Wealth
Income is just one part of the picture. Plenty of people earn high incomes, but have little or no wealth because they spend too much. In my opinion, net worth measures wealth and status more accurately than income. So let’s look at what the Prudential study said about wealth.
All LGBT respondents had the following amounts of debt (not including mortgage or home equity loans):
- 45% have less than $10,000
- 34% have $10,000 – $50,000
- 21% have over $50,000
Further more the majority of the LGBT population didn’t have fairly standard financial products:
- 40% have a savings account including money market or certificate of deposit
- 35% have an employer-sponsored retirement plan (401k, 403B, 457)
- 18% have an individual IRA that is not employer-sponsored
- 18% have an employer sponsored pension plan
- 15% have mutual funds
- 18% have individual stocks
- 8% have individual bonds
- 42% have life insurance
- 19% have disability insurance
- 10% have long-term care insurance
- 19% have a will or estate plan
These percentages are lower than the general population figures, expect for the individual bond percentages, which were equal.
Other Comparison Tools
I hope you found these statistics as interesting as I do. If you’re looking for more ways to see where you fall, you can check out the most recent data from the United States Census Bureau for Same-Sex Couples and the population as a whole. Keep in mind some people have significant qualms with the way the census produces its estimates.
I also really love the Income Upshot from the Marketplace Wealth and Poverty desk. It highlights “what your income says about you.” It not only compares your income and wealth with people in your zip code but other aspects of your life like whether you own your home, drink wine, liquor or beer, or have a pet.
As I said in the beginning, comparing yourself with others can provide perspective. But if you’re not accomplishing your financial goals, you’re missing the point, no matter where you fall on the spectrum. You need a clear understanding of what you want to accomplish and only then are you able to know whether you’re doing okay.
Let me know where you fall on the spectrum and what stats you find most interesting at the links below.