Climate change should be factor in retirement planning

Question: As winter approaches, I'm thinking about moving south or out west when I retire. But with severe weather increasing in those parts of the country, is this a good idea?

Answer: It's not unusual for pre-retirees to want to escape harsh winters or higher taxes in certain states. However, climate change may require more research before deciding to move, according to James Ciprich, certified financial planner and wealth advisor with Regent Atlantic Capital.

"Proximity to health care and lower taxes are always attractive options, especially for seniors; however, you now need to think in terms of what is my contingency plan in the event of a weather disaster," Ciprich added.

The effects of climate change can be seen across the United States. From torrential rainfalls in New York City to record-breaking, triple-digit highs in the Pacific Northwest, weather conditions are becoming more extreme. This past winter, south central Texas experienced power grid failures because of severe freezing temperatures.

Also, climate change is proving to be very costly, both environmentally and financially. Homeowners living in areas repeatedly devastated by hurricanes, floods or wildfires experience increased insurance premiums, higher deductibles, and more stringent underwriting guidelines, according to reports by McGriff-Truist Insurance Holdings, Inc.

In 2017, nationwide property damages because of hurricanes were more than $306 billion, breaking the 2005 record of $214.8 billion. These damaging storms affect not only coastal properties but those miles inland as well.

Since 1980, the average annual economic loss from hurricanes and floods had been about $54 billion — that is until the last decade, according to NOAA Climate Data records. The recent upsurge in property losses is partly due to extensive coastal real estate developments, much of which to accommodate an influx of new residents.

For those seniors relocating or even staying put during retirement years, they'll need to consider how to maintain property in case of severe weather. Specifically, financial resources for higher utility bills, home repairs from natural calamities and increasing insurance expenses, Ciprich said. While disaster planning is the antithesis of relaxation and leisure, preparing for emergency scenarios will become a more common occurrence as people age, he added.

Further, swapping high tax locations for ones that may have more costly homeowners' insurance premiums or increased utilities for year-round cooling could offset any savings achieved by relocating.

Ciprich suggests considering weather pattern changes when deciding whether to move or not. He emphasized the "need to take a close look at any possible destinations and what issues they may have" rather than just trading one situation for another.

Soon-to-be retirees who plan to move to coastal or other areas with increasing severe weather might also consider plans to mitigate risks from hurricanes, droughts, or wildfires through appropriate financial contingencies. In general, when evaluating relocation Ciprich recommends a "retirement destination test drive" to determine if it meets your lifestyle, financial and risk aversion expectations. This may take some time and experimentation.

"Maybe rent in the area for a year, so you can go through all of the seasons," Ciprich said. "After that, you might come to the conclusion that it wasn't really so bad, or you have changed your mind."

Whether you plan to relocate or not in retirement, intensifying severe weather will be a factor in overall living expenses. Again, your desired lifestyle, income and ongoing expenses should be the major factors to consider when deciding where to live.

Of course, your comfort and safety are always the utmost considerations.

Michael Bateman is a retiree who previously worked in marketing and corporate communications.