Milton adds to climate-change worries for retirees

As Florida residents start to a long recovery from the second major hurricane in just two weeks, the question of whether the state will remain a retirement destination seems inescapable.

On Wednesday night and into Thursday, Hurricane Milton and numerous tornadoes devastated parts of Western Florida, reportedly leaving several dead and millions without power. That followed extensive damage from Hurricane Helene, which later moved northward and unexpectedly wreaked havoc on North Carolina.

Florida has one of the oldest populations on average in the US and consistently ranks as among the top destinations for retirement, thanks in part to its warm weather and lack of state income taxes. But it also faces rising threats from climate change, with more frequent and severe weather events leading to higher insurance premiums, not to mention very real concerns and safety and wellbeing during hurricane season.

“The risk of natural disasters is certainly becoming a more significant factor in retirement planning, particularly for those considering moves to areas like Florida, which has seen a considerable influx of retirees from places like New York and other major Northeastern hubs,” said Joseph Boughan, of Parkmount Financial Partners, in an email.

“It's essential for retirees to ask themselves key questions before making any decisions: What new risks am I exposing myself to in this climate? How would I handle a natural disaster? How will rising insurance premiums impact my long-term financial plan?”

However, Florida is far from alone. Every state is affected to a degree by climate change, though the stakes are much higher for some than others.

And that is already affecting the housing market. Last year, 83 percent of prospective home buyers considered at least one type of climate risk in their searches, according to survey data from Zillow. Last month, the home-search and real estate service began including climate-risk data for listed properties, covering five categories: floods, wildfires, wind, heat, and air quality.

It’s a question previous generations didn’t have to consider when choosing a place to live. In the West, where drought and wildfires are a growing worry, people have been seeking new locations where those aren’t major issues. Last year, for example, California led the country in the highest net amount of people moving out of a state. However, the most moved-to state was Florida, data from U-Haul show.

“Where property prices have been on the rise in the past 10-plus years, these issues are creating a pause for some who would previously have thought there would be no issue selling their property at a future date,” said Kath Derisson, founder of Fyvie Financial, in an email. That has disproportionately affected people in coastal areas – even as those who face inland disasters like tornadoes also face risk, she said.

“This is the same for those who have experience of living in or near a country that has experienced war or combat. Immigrants into the US from countries experiencing or having experienced a natural disaster or one exacerbated by warfare for instance seem to have a greater understanding of the risk to the world versus domestic issues.”

An increase in wildfire risks has also been factoring into retirement planning, said Ron Strobel of Retire Sensibly, in an email.

“We are in Idaho where the threat of wildfires has become an annual discussion with clients who live in the mountains or who plan to retire to mountain towns such as McCall. Many of our clients own cabins or bare land in the mountains that they plan to build cabins on once they retire,” Strobel said.

The expenses of wildfire mitigation, such as for clearing brush and trees, is something to consider, he said. And in addition, insurance is becoming harder to get for people in high-risk areas, he said.

And there are basic quality-of-life issues to further consider, he noted.

“The constant smoke has also become an issue every summer, even for those of us whose homes are not at direct threat from wildfires. This past summer we had several weeks in a row of non-stop smoke and dangerously unhealthy air quality that essentially trapped us in our homes,” he said. “Idaho is known for its outdoor recreation, but being trapped inside during the best months of the year has left many considering a move to other areas.”

On the insurance side, there are benefits to having a mortgage, said Noah Damsky, principal of Marina Wealth Advisors.

“When climate risks are uninsurable or too high of a cost to insure, we can push some of the risks to third parties without the high costs of insurance,” Damsky said in an email. “Retirees will sometimes have paid off or nearly paid off their mortgage, which leaves them exposed to loss on all the equity in their home. Refinancing their home loan, qualifying with income before they retire or with retirement account distributions, is an effective solution to hedge the risk of natural disaster without the high cost of insurance.”

In the context of impact investing, which is important to some clients, the issue really hits home, Derisson said.

“It has a knock-on effect when we also discuss impact investing with them as we do with all our clients. But it is forming a larger conversation in the management of investments versus where they live,” she said. “However, once we discuss retirement and what that looks like, the majority are including a move from their current location to a 'safer' lower risk environment and one that will have a supportive community should something occur.”