Retirement and Climate Change
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Retirement and Climate Change

Choose Wisely

Retirement is a dramatic change in lifestyle, where your normal structured workday gets pushed out the window, leaving you with ample time for whatever pursuits your heart desires. For some, this life change involves packing up the house and moving somewhere new. But deciding where to move is stressful, particularly if you sell your old home to embark on a new adventure. Everyone is slightly haunted by the prospect of moving and not liking the new location or possibly losing equity in their retirement home. You can now add climate change to the list of worries as you ponder your golden future.

I’m an earth scientist by training and profession, so I’m probably overly concerned about risks from natural disasters. We looked at retirement locations for years, scouring the Zillow and Trulia listing in various locations to get a feel for housing markets. My wife quickly grew weary of the litany of disasters I conjured up when viewing homes.

“Look at this beautiful riverfront property.”

“It’s too low down — not above the 500-year flood line.”

“You are not going to live that long.”

“Still, I’d worry too much.”

“Doesn’t this home have a wonderful view of the valley?”

“That’s because it perched on a cliff above a major fault zone. One shake, and it tumbles to the bottom.”

“Well, there’s another one down the road, and it’s not on the cliff edge.”

“The grade appears to be about 10 degrees. There’s too much landslide risk. Did you know you can’t get landslide insurance?”

“So you’ve told me.”

“How about a Florida beachfront lifestyle? … Sorry I asked.”

And the list goes on. Hurricanes, earthquakes, tsunamis, wildfires, and more linger in the shadows, ready to feed my disaster paranoia. But disaster risk is real, and sound retirement planning should add climate change to the list of concerns.

Changes Too Quick to Outlive

Historically, natural disasters have statistical predictability based on their history of occurrence. Historical records provide a basis for analyzing the probability of occurrence for numerous hazards. For example, major earthquakes along the Cascadia Fault Zone affect the Pacific Northwest about once every 500 years. When I was studying meteorology in college, historical records provided a reasonable look at the odds of a major hurricane occurring during any given year. But climate change is now mucking with the mathematics and changing the frequency of some disasters.

If you buy a beachfront bungalow on the Florida coast, what are the odds of a storm severely damaging or destroying your home? Unfortunately, looking at historical records can’t provide you with a reliable answer because climate change is increasing the frequency and intensity of tropical storms, impacting the Gulf Coast and southeastern seaboard of the USA.

Statistics may tell you there is a one percent chance of a hurricane hitting your home in any given year. But the statistics are only as good as the input data, and we don’t have any precise knowledge of how climate change is altering historical probabilities.

What are the chances of major devastating storms hitting the same area of South Louisiana twice during a given year? Evidently higher than they were twenty years ago, if 2020 and 2021 are any indication of the future. But we don’t know how much higher.

Climate change accelerates disaster frequency, and the associated financial risks may dramatically change during those golden years, meaning retirees may not be able to ignore and outlive some types of climate change risk.

Financial Advisors Consider Climate Change Risk

Wealth managers and financial advisors are taking notice of these changes in risk and striving to understand the impact of climate change on their client’s retirement plans. Fires, droughts, floods, and storms all constitute legitimate financial risk considerations.

A retirement move to a dreamy beach bungalow could impact your plans in several ways. Loss of equity through direct home damage is a real risk, and it is also coupled with the possibility of real estate values falling as sea-level rise impacts coastal property values.

Suppose your home equity is part of a larger plan for a final move to a retirement home. In that case, losses from a climate change disaster will have long-term effects since catastrophic losses early in retirement could disrupt even the best-laid plans. Recent events in Surfside Florida showed that even supposedly safe condo investments carry significant risk.

Pending changes in flood insurance costs could also eat into retirement savings, leaving fewer funds for travel and other types of discretionary spending. After years of losses, the FEMA-run National Flood Insurance program is raising premium rates to match the actual risk exposure a home carries. Higher risk areas may see substantially higher premiums.

Retirement should be a change toward relaxing and enjoying life. Climate change makes picking a good location a critical consideration.

Related Articles:

Climate Change: Increasing the Frequency and Intensity of Flooding (by WM House; Medium) 

Your Beachfront Dream Just Got More Expensive — Climate Change Meets Federal Flood Insurance (by WM House; Medium & ArcheanWeb)

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Reflections on life’s journey and thoughts on the Tao Te Ching — In Search of a Path

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How climate change could impact your retirement plans (by Kent McClanahan and Angie O’Leary; MarketWatch) 

William House
William is an earth scientist and writer with an interest in providing the science "backstory" for breaking environmental, earth science, and climate change news.