How climate issues could compound retirement, homeownership challenges

With climate challenges encroaching more on financial and insurance matters related to retirement and homeownership, a personal finance columnist at Business Insider has recently asked a series of questions related to how these challenges could impact prospects for homeownership and retirement in a new column.

In addition to an accelerating pace of natural disasters and extreme heat playing out across the world, climate issues are also now beginning to impact the financial world and homeownership prospects for Americans residing in prone areas. While outsized home price appreciation has contributed to riskier areas seeing population growth due to generally lower home prices, insurance companies themselves are also pulling out of populous coastal states including California and Florida.

This has led to questions about the future posed by personal finance columnist and Accredited Financial Counselor Jackie Lam.

“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, Tenn. — talk a lot about the climate crisis affecting our futures,” she wrote in her recent column.

Extreme weather, and the aversion that U.S. insurance companies have toward carrying policies that cover it, have made prospects of homeownership more complicated and challenging, Lam explained.

“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,” she wrote. “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?”

Such matters are also raising the price of homeowner’s insurance premiums — an issue that could have a material impact on reverse mortgage borrowers in prone areas — in addition to already affecting the availability of such policies.

Climate risks could also impact a home’s future value, she wrote.

“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?,” she asked rhetorically. “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?”

Retirement planning could also be impacted by these emerging realities, since it may be difficult to predict the best place to retire. This naturally impacts prospects for retirement planning and savings, she explained.

“While a lot remains unknown about the effects of climate change, I’ve resolved to stick to a retirement savings plan,” she wrote. “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.”