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Retirement expert: Start thinking about climate change in your golden years
Stephanie Asymkos, Reporter September 10, 2021
Extreme weather conditions brought on by climate change should cause some Americans to rethink their retirement destinations, according to one expert.
“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,” James Ciprich, certified financial planner and wealth advisor with RegentAtlantic Capital, told Yahoo Money. “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.”
No longer relegated to Tornado Alley or California’s brush country, the effects of climate change can be seen across the United States. Just last month, New York City saw a record rainfall a week after setting the previous high, while earlier this summer residents of the Pacific Northwest sought in-home air-conditioning units — long rare for the region —as temperatures reached record-breaking triple-digit highs. This past winter, central Texas experienced a deep freeze that shut down its power grid.
For those set on relocating or staying put for their golden years, they will likely have to contend with wild weather and safeguarding their homes, which means nest eggs will be spread even thinner for inflated utility bills, possible home repairs from natural disasters, and ongoing expenses like insurance, Ciprich said.
Disaster planning could be the antithesis of relaxation and leisure, but emergency scenarios may become bigger and more common disruptions as people age. Ciprich added that evacuations could become more difficult as mobility typically declines later in life and shelters might not be able to accommodate people who require intensive care.
Swapping high taxes for costly home insurance or the need for year-round cooling could offset the cost of any savings achieved from relocation.
What surprises Ciprich’s clients, the majority of which come from the New York metropolitan area, is how little they actually save when they move to lower-cost states because what’s saved in property taxes is spent in other areas like homeowners insurance.
Connecticut, New Jersey, and New York residents pay among the highest property taxes in the country, but New Jerseyans pay an average of $751 per year in homeowners insurance, which is 43% below the national average of $1,312 for a $250,000 home. For comparison, Floridians pay $1,353 per year for a home of the same value, according to Bankrate, to account for its geographic predisposition and frequency of natural disasters like storms, hurricanes, and flooding.
While residents in Hurricane Alley states like Florida, South Carolina, and Texas have some of the country’s cheapest flood insurance — all under the U.S. average of $958 — a larger share of homeowners require this coverage versus more costly states. In Vermont, which has the highest average flood insurance cost, only 1.76% of households there carry it.
The expenses don’t stop at insurance. There’s a cost associated with attempting to protect your home and valuables from natural disasters.
Hurricane preparedness provisions like plywood, nails, and sandbags are pricey one-off expenses, but permanent fixtures like home power generators run as much as $7,750. A 10-square-foot prefabricated tornado safe room could set you back $3,000 plus installation. Hurricane shutters range from $2,000 to $5,750, and a seismic retrofit to protect against earthquake damage may cost between $3,000 and $7,000.
Ciprich suggests evaluating the changing weather patterns even when there are no plans to relocate but emphasized the “need to take a close look at the destination and what issues they have” rather than trading one threat for another.
So where to go?
Some soon-to-be retirees actively plan to mitigate the risks of hurricanes, droughts, and wildfires, while the threat is a non-starter for others. After all, The Villages, Central Florida’s sprawling retirement community, was the country’s fastest-growing metro area of the last decade despite concerns the state could experience harsher hurricanes.
In general, when entertaining the thought of relocating to a new location for your golden years, Ciprich recommends a “retirement destination test drive” to determine if it meets your expectations before stakes are firmly planted in the ground.
“Maybe rent in the area for a year so you can go through all of the seasons,” he said. “After that, you might come to the conclusion that it wasn’t really so bad or you change your mind.”