Society of Certified Senior Advisors: How Climate Change May Affect Your Retirement

Extreme weather events will likely cause expenses to rise across the country while presenting particular danger to older adults.

“Most people want to escape the winters of the Northeast or the high taxes of certain states, but [climate change] may make them pause and do a little bit more research,” says Certified Financial Planner James Ciprich. “Proximity to health care and low taxes are always attractive options, but now, especially for seniors, you almost need to be thinking in terms of what is my contingency plan in the event of a weather disaster.”

According to NASA, climate change is impacting weather events across the country. Recent years have brought devastating hurricanes to the Eastern Seaboard, flooding in the Midwest and South, and wildfires in the West. It appears we can expect more of the same in the future, with rising sea levels and continued warming. How will this affect older adults?

It’s likely the result will be seen in three areas:

Older adults are most likely to die in extreme weather events.
They may have to rethink where they will retire.
Seniors will face increased costs of living and likely lower returns on investments.

Mortality Factor

When hurricanes, floods, and fires roar through populated areas, older adults are more likely to be left in place, hospitalized, or killed. Hurricane Katrina took the lives of 1,833 people, and 70% of them were older adults. When the Paris heat wave hit, half of those who perished were seniors.

States at Risk

If you’re considering several states for retirement, or want to check on climate risk in your own state, you’ll want to take a look at States at Risk. Just click on a state to find which risks related to climate change it carries. This is a great tool for a first look at what to consider, although we recommend researching individual geographic areas within a state before making any decisions about where to live. Another tip is to rent in an area you’re considering for retirement before making a decision to purchase.

A portion of these grim statistics is due to the relative immobility of the older population, and in part to their more fragile overall health. Regardless of the cause, older adults are more at risk during extreme weather events.

Where To Retire

It seems there is nowhere that is completely free of the impact of climate change. Portland, Oregon, known for fog and rain, saw temperatures break 115 degrees last summer. Massive floods have hit Iowa and Nebraska. The entire state of Texas lost power during the winter of 2021 when winter storms swept through. California is consumed by fire on a regular basis. The subways of New York City had to be closed due to hurricane-induced flooding this past year.

Florida has been a Mecca for older adults. The inviting combination of warm weather and no state tax has drawn seniors for decades. While that is still true, many soon-to-be retirees are rethinking their options. One couple, David and Rachel, had planned their retirement for years. They had purchased the condo of their dreams on the Florida coast and looked forward to seaside living in a community with thriving shops and restaurants. “We loved it there, we would visit regularly,” Rachel says.

Then they started seeing sandbags stacked along the local roads. “It wasn’t hurricane season, there wasn’t even a recent storm, and water on the road was there every day,” says David. “We couldn’t stay there, rumors and news reports suggested that climate change was only going to make the flooding worse over time — we were imagining not being able to get in or out of our condo depending on the water level.” Rachel says she began wondering what she’d do if a hurricane came, and how high the water would get. What would she do if they needed to get to a doctor? Regretfully, the pair sold their dream home.

And it’s not just Florida. The National Weather Service reported that last June was the warmest ever on record for Phoenix, Arizona. The high was 118 degrees. And even if carbon emissions were to cease immediately, the Earth is going to get 1.5 degrees warmer over the next 30 years, according to a United Nations report.

Financial Impacts

Many experts are recommending that all of us plan for higher costs in the future due to climate change. The potential impacts are daunting:

Crop failures
Supply chain disruptions
Infrastructure damage

Goods will likely become more expensive to produce and transport, and everyone will pay the price as roads and bridges buckle from heat or are washed out by flooding. On a personal level, seniors may find themselves spending more on utility bills, safeguarding their homes against weather events, home repairs, and increased insurance cost and coverage. Those living in the West may be air conditioning their home year ‘round, while others may be dealing with unexpected mold mitigation or water damage.

Even now, many older adults are surprised at the cost of home insurance. Ciprich’s clients, who often leave the New York metropolitan area to head south for states that are lower cost, often are surprised to find they spend just as much. What’s saved in property taxes is often spent on homeowners insurance.

And they usually haven’t factored in the expense of nails, plywood, and sandbags that are necessary whenever a storm threatens, not just when one hits. Home power generators can set them back up to $7,750, hurricane shutters are $2,000 to $5,750, and retrofitting against earthquake damage is $3,000 and up.

Returns

Most retirees are invested in the stock market and expect average historic annual returns in the range of 10%. But can that last? Higher inflation driven by climate change is a real possibility, and it will erode real returns. Many companies that have benefitted from the fossil fuel economy will incur large expenses as they transfer to cleaner energy. And high-growth companies may find money is more expensive to borrow, lowering returns.

With all this bad news, what can older adults do to protect themselves? Build climate change into plans for the future. This includes planning for higher costs, lower returns, and upping insurance. Surprisingly, many of those living in coastal areas do not carry flood insurance. Retirement, when most people are on a tight income, is not the time to skimp on insuring against geographic risks, whether that’s floods, fire, earthquakes or some other risk.

Additionally, older adults can consider climate change when looking where to retire. Seek out areas with adequate, but not extreme, rainfall, moderate temperatures, and no threat from rising sea levels. Be realistic about considering the entire cost of living in a certain area, not just taxes or insurance. Nothing in life is certain but embracing planning can help make the future brighter.