Best New Ideas in Retirement

Sept. 27, 2022, 4:45 p.m. EDT

A retirement safe from climate change? Ask the tough questions about real estate and property insurance

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By Rachel Koning Beals

The images were shocking: tidy rows of suburban houses ablaze as a wildfire ripped across the open prairie now populated by fast-growing Louisville, Colo., whose 20,000 residents are nestled perfectly between desirable Boulder and Denver. Some 1,000 homes were a total loss and tens of thousands of residents fled the deadly December fire that flared up unusually late in the season, kindled by a multiyear drought.

Earlier in 2021, days-long media coverage darkened with dwindling hope for survivors in a crumbled condominium tower in Surfside, Fla., just north of Miami. A confluence of factors was believed to be at the root of the collapse that claimed 98 lives , many of retirement age: delayed maintenance, outmoded code standards grandfathered in, plus the long-run effects of a higher water table and corrosion from salt water.

For many, it was a wake-up call that a densely developed south Florida — as well as Tampa and nearby communities on the Gulf side — were going to see building resilience tested over and over by global warming-linked coastal water rise . Residents must also consider the increased likelihood of extreme downpours as climate change intensifies typical weather incidents and expands their seasonality. 

Yet plenty of observers bristled at the climate-change connection in Surfside because building factors and human error were present. It’s a reflection of how challenging it can be to push real world solutions for an existential risk like climate change. Who wants to think of a Floridian paradise, long a U.S. retirement destination and international tourism draw, in deeper peril than the standard hurricane watch?

The reality is, climate-change impact is already being felt . Natural disasters aren’t new, but their frequency and staying power are intensifying. And key sectors that factor into retirement considerations — real estate and insurance — are lagging in their preparation for a new-normal.

With each passing tornado, flood or forest fire, it is becoming increasingly clear that one of the best new ideas in retirement is protecting our homes from climate change . It will be costly, both financially and politically, and will need to include a sea change when it comes to how the insurance industry operates in a world in which 100-year weather events are happening every five years, and all over the country.

“This is one of the major systemic issues today: climate change is not being priced into housing,” said Raj Dosaj, head of real estate for Cape Analytics, which provides geospatial maps and property information. “In almost all areas with growing risks, most homeowners can still get affordable property insurance — in fact, many of these areas are naturally beautiful and, with the pandemic, have seen even faster home-price appreciation than other areas.” 

Flexible work schedules during the height of COVID-19 pulled people out of heavily-populated areas to work at their own vacation homes or Airbnb-type rentals and workplace flexibility may be here to stay. Plus, what’s been billed as the “Great Resignation” during the pandemic lured some 4.3 million Americans from the workforce into retirement .

According to many experts, climate change poses a potentially dangerous future in some locations even if a warming atmosphere can be slowed by global efforts to swap high-emission oil and gas for solar, wind, hydrogen and nuclear power, and by incentives to eventually designate all gasoline-powered cars for scrap metal and replace them with electric vehicles , electric bicycles and improved public transportation . Some of the warming effects just can’t be reversed.

The good news is Americans can still imagine a scenic, active and secure retirement, but they need to factor climate change into their plans. Joseph Coughlin, founder and director of the Massachusetts Institute of Technology AgeLab, says that any message about climate-change preparedness has to empower retirees. 

“It can’t be about washing away by the sea. It has to be: This is how you fight back, take control, be better prepared. At a certain age, people want to hear less about impending frailty than about how to maintain capability. Climate-change adaptation should be no different,” said Coughlin. The AgeLab he runs with graduate students examines aging and technology use by those aged 50-plus, which includes Generation X and boomers.

Prepared would-be retirees should be asking — and the service industries must be able to answer — what type of housing will be safest from extreme weather, fire and power outages? Can I be insured on a coast? In a flood zone? If I qualify, can I afford that property insurance? What if I have to flee danger quickly? Can I enjoy the outdoors most days of the year? Can the indoors be cooled without breaking the bank?

Be informed: What does science tell us?

Every summer, from Miami to Cape Hatteras, N.C., people prepare for a possible hurricane. Residents get ready to shelter in place behind hurricane-grade windows or pack an overnight bag and crate up their pets to flee via a designated route to safety. When big storms do hit, which they tend to do every five to seven years , television broadcasters rapidly descend to cover the chaos and damage. They usually find some displaced or impacted retirees to interview. 

“As NASA and other valuable agencies tell us, evidence is emerging linking climate change to extreme weather, such as hurricanes and storms most assuredly affecting favorite coastal warm-weather retirement destinations,” said AgeLab’s Coughlin.

But it’s not just hurricane alley and all its press coverage that bear watching. Rising waters are impacting retirement destinations favored by empty-nesting urban downsizers on waterfronts as far north as New England, or even Nova Scotia. 

And looking inland, more than 13% of the U.S. population currently resides in the 100-year flood plain . That number could rise to 15.8% by 2050 and 16.8% by 2100, according to a study largely critical of underreporting in current Federal Emergency Management Agency (FEMA) mapping, addressed in a commentary by the Yale School of the Environment .

If it’s not rising water that’s raising concerns, it certainly is an expanding tinder box. A report by the United Nations Environment Program estimates that with even moderate temperature increases, the number of extreme wildfires globally will increase by as much as 30% by midcentury and 50% by 2100. 

Severe weather can also bring harm even if it doesn’t leave lasting property damage. Government data analyzed by the Associated Press showed power outages tied to severe weather rose from about 50 annually nationwide in the early 2000s to more than 100 annually on average over the past five years, according to electricity disturbance data submitted by utilities to the U.S. Department of Energy. Blackouts can impact medical care at home, limit our ability to preserve food and generally, spoil the ability to enjoy an active retirement. U.S. power customers on average experienced more than eight hours of outages in 2020. And creating your own power is a cost consideration; generators can run anywhere from $4,000 to $20,000, said AgeLab’s Coughlin.

Real estate: Buyers should ask climate-change questions

Forbes, one of many publications that issue ever-popular home-buying destination lists, now factors climate risk into its annual roundup of 25 retirement dream towns . But online search companies, such as Zillow, Redfin and Trulia, have been slow to alert for flood risk or other potential red-flags on listings. broke with that tendency, adding flood data in 2020 and wildfire data , compiled by nonprofit First Street, this year.

The First Street/ tool and accompanying report finds that as many as 20 million properties in the lower 48 states face “moderate” risk, or up to a 6% chance of experiencing a wildfire over 30 years, essentially the life of the most popular mortgage. And unlike the typically narrow one-year window used in present-day insurance pricing, the wildfire tool assesses the risk to homes and commercial buildings from damaging wildfires if they struck right now, and up to 30 years in the future.

Real estate agents, mortgage lenders and other professionals in the industry believe buyers aren’t asking enough climate-change questions, especially if they plan to stay in a property for years — and the industry isn’t feeling compelled to disclose much either.

Risa Palm, professor of Urban Studies and Public Health at Georgia State University, and her colleague in the political science department, Toby Bolsen, wrote in a commentary of their efforts to log real estate dedication to climate-change information. 

The duo surveyed 680 licensed Florida real estate agents in late 2020. Their responses suggest that prospective home buyers are not routinely taking elevation or flood vulnerability into account when searching for new homes, and the availability of improved flood risk maps has had little or no impact on them.

“Part of the problem may be that mortgage lenders and appraisers aren’t accounting for properties’ vulnerability to sea level rise, so home buyers aren’t immediately feeling the risk in their pocketbooks,” Palm and Bolsen say. “Wealthier buyers who don’t need a mortgage [and make a cash purchase] aren’t required to purchase flood insurance, and Congress has a history of rolling back flood insurance rate increases.”

It’s true that many factors impact housing prices. Even though California experienced five of the state’s six largest wildfires in state history in 2020, overall housing demand meant that even devastated wildfire communities experienced jumps in home prices , a phenomenon that some said only puts more people in harm’s way since there’s little incentive to take preventive fire measures.

A broader 2020 analysis from showed that home buyers were only beginning to factor concerns about climate change into their decision-making. As a result, homes in areas vulnerable to fires and floods could see weaker price growth, but the discount wasn’t dramatic, economists at the trade group say.

For buyers, risk assessment may be abstract and overwhelming, which is why the professionals need to be more reliable. 

“When it comes to location, the physical impacts are changing with climate change, but they’re changing at different rates, in different directions, in different places, that are not well understood by most people. Maybe Miami looks better than Phoenix for your heat sensitivity. Maybe Dubai looks better than either,” said Rich Sorkin, CEO of climate analytics provider Jupiter Intelligence.

”The second factor when it comes to retirement and climate change is this concept of duration mismatch … the information that people are looking at is the wrong time horizon for the decision they’re making. It’s like looking at a potential partner at 18 years old. And reassessing that partner at 48. Maybe not such a great match,” he said.

Robert Heck, vice president of mortgage with Morty, an online mortgage marketplace headquartered in California, agreed that the real estate industry is a slow adapter to climate risks.

“We’ve yet to really see lenders barring certain areas of the country specifically due to climate change from financing,” Heck said. “We see it in some markets for homeowners insurance — I’m in Lake Tahoe in California and we’ve lost a lot of policy underwriting due to drought and fire — and that can circle back and impact mortgage approval, but it’s a bit indirect.“

“We try to help retired clients navigate all the ongoing costs — and climate change factors should be in there — especially as homeowners will want to make retirement savings stretch as long as possible,” Heck said. “Should they look at a smaller home? Should they reconsider location? We want to walk them through all of it.” 

Insurance: a reckoning in the making

Led by the deadly and costly Hurricane Ida in the U.S.and massive flooding in Europe, the world racked up $329 billion in economic losses linked to severe weather in 2021, and only 38% of that bill was covered by insurance .

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