Planning for Retirement: Tips for Same-Sex Couples

Retirement is an important concern for all Americans — and rightfully so — but for unmarried LGBT couples, special circumstances can make retirement planning more challenging. "Particularly, if you're unmarried, there's no legal recognition of your relationship," says Elisabeth Baldwin, Vice President and Financial Consultant at Regions Investment Solutions.

While same-sex marriage is valid in all 50 states, it’s important that you and your partner or spouse prepare for retirement by planning early and ensuring that you have a complete estate plan. Ask yourselves these four questions to help secure your golden years.

1. Is Our Marital Status Up to Date?

If you, your spouse or partner were married before the 2015 Supreme Court ruling making same-sex marriage a right, take the time to verify your current marital status. If either of you were married before 2015 but then moved and separated in a state that didn’t legally recognize same-sex marriage, it’s easy to assume that your prior partnership has no legal standing, but that may not be the case. It’s important that you take proper action to ensure that any prior marriage is legally resolved.

2. Who Are the Beneficiaries on Our Retirement Accounts?

If you want to leave your retirement account savings to your partner, you'll need to name him or her as the beneficiary on your retirement account.

The ability to name your partner as a beneficiary on an employer-sponsored plan account will depend on your marital status and the details of your employer's plan. Some employer-sponsored retirement plans allow you to name whomever you want as a beneficiary, while others only allow you to name a spouse or a child as a beneficiary. In that situation, unmarried couples might consider additional or alternative savings vehicles, such as Individual Retirement Accounts, with more flexible beneficiary rules.

"For those who want to put away more than IRA contribution limits allow on an annual basis, there are also a number of additional options, including life insurance policies, annuities, and non-qualified accounts," Baldwin says.

3. Do We Have Wills?

In the absence of a will or trust, state law will decide your heirs for you — typically your spouse and/or nearest blood relatives. A will controls the distribution of your estate when it enters probate court, so if you're unmarried and want to leave assets to your partner, you'll need an official legal document that explicitly outlines your wishes.

Baldwin also stresses the importance of preparing a health care directive if you're unmarried. "A health care directive is a legal document that allows you to identify who can make health care decisions on your behalf if you become incapacitated," she says. "Laws vary by state, so it's important to check with an expert in your area."

4. Will We Receive Spousal Social Security Benefits?

In addition to recognizing same-sex marriages, the Social Security Administration now also recognizes non-marital legal relationships, such as domestic partnerships and civil unions, when processing retirement surviving spouse and lump-sum death payments. However, you and your partner must file an application in order to be approved. Once you’re done, use the Regions "Save for Retirement" calculator to help plan for retirement.

5. Will We Owe Estate Taxes?

Only married couples are eligible for the marital deductions that shelter partners from estate tax burdens. Unmarried couples can work with a tax professional to minimize future estate and inheritance taxes.

"Overall, planning early and continuing to update your retirement plan is key," Baldwin says. "Enlisting trusted advisors such as attorneys and financial consultants early in the process can help you form a comprehensive plan and ultimately gain peace of mind."

With the right tools and preparation, you can help ensure your retirement is just as you and your spouse or partner intended. Learn more about LGBT retirement-planning considerations in this slideshow.