Retirement Planning for Same-Sex Couples

June 26th, 2013 was a historic day for same-sex married couples in that these couples are now able to receive federal benefits thanks to the Supreme Court’s decision in U.S. vs. Windsor. The federal government will now recognize valid marriages for same-sex married couples who live in the thirteen states (along with the District of Columbia) where same-sex marriage is legal.   Social Security benefits that historically have not applied to same-sex couples now do.  Federal tax benefits will now be available for same-sex couples along with veteran and military benefits, federal employment benefits, and even immigration benefits that are usually tied to marital status. 

How does this change affect retirement planning for same-sex couples?  For example, federal tax laws haven’t recognized these benefits as of yet.  What if you live in one of the thirteen states and/or the District of Columbia and are trying to plan for retirement now?  Or better yet, what if you live in one of the states that don’t recognize same-sex marriage, and you’re trying to plan for retirement?  Bottom line is that with the ruling of U.S. vs. Windsor happening only a month ago, there are many unanswered and unclear questions especially when pertaining to planning for retirement. 

When one thinks about retirement or even plans for retirement, some of the concerns are safety, guarantees, and even being able to have an income stream you can’t outlive.  Expect to see changes in the future, but right now, there are only a handful of insurance carriers that will allow same-sex couples to take advantage of benefits that their products may provide.  For example, most insurance carriers have some sort of income product.  Whether it’s providing income immediately, or being able to forecast predictable income for the rest of a client’s life, usually there is an option to have joint payments.  Joint payments are defined as income payments that are guaranteed for the joint lifetimes for you and your spouse.  The problem is the insurance industry hasn’t recognized same-sex couples as spouses; therefore, trying to provide a joint income stream for same-sex couples is difficult using these types of products. 

I mentioned earlier that there are a handful of carriers that will allow same-sex couples to take advantage of benefits, joint income payments being one of those benefits.  Great American for example spells out in their disclosures on joint lifetime income that “you can receive income payments that are guaranteed for the joint lifetimes of you and your spouse, or legally recognized domestic partner”.   Athene will also allow joint income payments as long as the individuals are legally married, and the state where they reside recognizes same-sex marriages.  Most of the other top insurance carriers providing guaranteed lifetime income however, will not all same-sex couples to take joint income payments. 

With this change for same-sex couples being able to take advantage of federal benefits literally happening just 30 days ago, expect the ambiguous questions to be answered sooner than later.

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