How will climate change affect your retirement?
Climate change is affecting the landscape around the world. In addition to scars from burns, soil erosion, deforestation and other environmental damage, the record high temperatures may also be affecting your retirement landscape in some unexpected ways.
Depending on how long you’ve been planning your retirement destination and how much longer before you spend your non-working days there, the climate may have changed since your initial plan rollout. If you’re young, remember the climate can still change dramatically before your time comes. A once-pleasant coastal escape may now be a target for hurricanes. Similarly, the quiet cabin in the woods might now be sitting in a high-risk wildfire area. Even the tropical escape you planned to call home could be threatened by volcanic activity.
Related: The generational divides on climate anxiety
In short, extreme weather such as hurricanes, flooding, freezing temperatures and wildfires are all becoming increasingly common in some areas. That reality may force some changes in your retirement location planning.
As mentioned, climate change may damage the area where you were planning to spend your retirement years. In addition to the average temperature, amount of rain, snowfall and wind, you’ll want to be aware of other weather-related and natural disasters. Are there risks of earthquakes, tornadoes, hurricanes, volcanic eruptions, landslides or blizzards? In addition, as the weather changes, will the area become overrun by animals you don’t want to live near, such as insects, alligators, snakes, spiders, bears or scorpions? Remember you’re not the only one moving to better climates.
Retirement elicits the dream of spending your golden years enjoying each day doing your favorite things. Unfortunately, global warming may have a say in your extracurricular activities. For example, if Palm Springs or Las Vegas runs out of water, golf courses may shut down. If fishing is on the agenda, make sure the lake isn’t drying up. Gardening, bike riding, walking and other activities may also be affected by rising temperatures.
Perhaps one way you don’t realize climate change will impact your retirement is in the everyday cost of shelter expenses. Moving across state or county lines can drop or increase property taxes, for example.
As temperatures rise, natural disasters and higher energy consumption can take a toll on your finances. Damage brought by hurricanes, flooding, wind, hail or wildfires may also lead to increased insurance costs. In high-risk areas, lenders or insurance companies may require additional coverage — and it can add up!
The cost of the actual housing may change dramatically too. If you plan to sell your existing house, you might find it has lost value due to wildfire risk. Or, if you’re planning to buy a house along the river, you may discover flooding has become an issue, or the waterway has shrunk and no longer contains fish. Whatever your situation, check to ensure you still have the amount of equity you’re counting on for your next financial move. Also, keep your finger on the pulse of any housing market you’re planning to enter.
Energy costs are another area of concern when it comes to retirement. Even if your home is paid for, you’ll still be forking over money for insurance, property taxes and utility bills. The lower the bills, the more money you’ll have to play with, so you may want to invest now in renewable energy that will keep your bills low later.
Get a quote for solar panels and check into local, state and federal rebates to help cover the upfront costs. Also, research the best green energy options in your area, including geothermal, wind and hydro. If you’re feeling like the upgrade isn’t worth it in your current home, or you plan to move early in retirement, consider buying a home with the upgrades included.
At a minimum, you can convert to water and energy-efficient appliances, low-energy light bulbs and maybe some on-demand water heaters in high-use areas. The goal is to create a retirement home that is comfortable yet capable of keeping maintenance and upkeep costs low.
Other living expenses
Climate change can make a marked impact on a region in a host of different ways. It can feed or starve the economy by providing jobs in a healthy environment or eliminating entire communities through disaster. It can put dinner on the table in thriving production areas or cause food insecurity during droughts.
Therefore, watch trends in the area you plan to live in and use the forecasts to calculate changes in everyday living expenses like fuel, utilities, food, entertainment and medical care. These relatively fixed expenses can still vary widely in cost, so be prepared before you get settled.
Climate change also influences the investments you make toward funding your retirement. For example, you may want to lean into ESG (environmental, social and governance) investing. It’s a way to evaluate and support companies that meet your environmental criteria for your hard-earned dollars.