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Courtesy of Jackie Lam
- My friends and I aren't sure how the climate crisis will affect our retirement, only that it will.
- If I live in a place with natural disasters, homeowner's insurance won't be a guarantee.
- Instead of making specific plans for my retirement, I just have to be ready for whatever comes.
A few months ago, my friends and I were at Sunday brunch. One of the attendees brought up the climate crisis and how it's affecting everything, from the economy to how we live and think about our futures. Another friend replied, "Well, the good thing about climate change is that it gives me a reason to move."
While I side-eyed my friend's response, he did touch upon something that's been on my mind a lot: Where will we live in, say, 40 years? And how will this ultimately affect our retirement plans? My colleagues and I — freelance writers who live in different parts of the country, the West Coast, the Pacific Northwest, Utah, Florida, and Nashville, Tennessee — talk a lot about the climate crisis affecting our futures.
The crisis makes it hard to commit to homeownership
With ice caps melting and sea levels rising, the idea of buying a home when the weather can change dramatically and be extreme or unpredictable is ominous. Let's say I want to buy in an area that ends up being prone to coastal flooding, tumultuous storms, extreme heat, frequent and intense droughts, and wildfires. Would I need to move? Or if I wanted to stay put, how much would I have to spend modifying my home so that it could adjust to these shifts in weather?
The climate crisis will also affect homeowner's insurance. For one, it can increase the cost of premiums. It can also affect how available it is. Insurance carriers are already pulling out of offering homeowner's insurance or aren't offering new policies in California because of the rebuilding costs due to the extreme weather and natural disasters we've been experiencing.
As a resident of Southern California, I had to evacuate when the 2020 Bobcat Fire inched near my cabin in a canyon area. This past winter, we endured record rainfall. After the Bobcat Fire, I was denied renter's insurance. I recently applied and now have a policy, but it was a struggle for a while because I lived in a high-risk area.
If I ever decide to be a homeowner, what if the value of my home plummets because of the risks related to the climate crisis? How challenging will it be to get homeowner's insurance where I live? And how would that affect the market, and how easy it would it be to sell my home?
It's hard to know where to retire
As for where to settle down in my retirement, the climate crisis throws in another wrench. My friends are talking about moving to different parts of the country for retirement, and they all have their reasons for doing so — to have a lower cost of living, to be closer to family, for a more comfortable lifestyle, or to be in a region that's more in line with their lifestyle.
But if I'm saving up to buy a home in Arizona or a beachfront condo in Florida in a few decades, will that be a wise choice? As sea levels rise, certain areas in the US are highly vulnerable.
Here in California, it's predicted that housing costs will rise. That means budget-friendly housing will be scarcer. It's probably best to keep an eye on what experts predict and try to be nimble and flexible. Saving for a retirement home is like trying to hit a moving target.
It leaves my retirement planning in the lurch
Because it's hard to predict where I'm going to retire, and if it's sensible to purchase a home in certain areas, it bleeds into my retirement savings plans. For now, I have to assume I'll keep renting.
Housing costs are a big part of saving and planning for retirement. It's a bit frustrating to not know how much I will need to enter my golden years. What is known is that I'll be relying on funds from my 401(k), savings, taxable investment accounts, and a wee bit of pension I will be receiving from my time working at a labor union.
Because I haven't decided on whether I can buy a house, I'm focusing on funding my retirement accounts until I've done my homework to figure it out — maybe I'll just stay where I'm at.
While a lot remains unknown about the effects of climate change, I've resolved to stick to a retirement savings plan. No matter what happens, it's important to stay informed, be open to change and uncertainty, and do what I can to plan in my tiny corner of the world.