Climate change, economy, environment, income, retirement, risk management, Socially Responsible Investing, SRI

Rising Seas and the Risk to Retirees

Florida has always been considered a favorite retirement destination. The warmer climate attracting older American’s who have health issues ranging from Asthma to Arthritis, from Heart Disease to Parkinson’s. 20% of Florida’s population is over age 65 (compared to only 15% in New Jersey).

An additional challenge facing retirees in both Florida and New Jersey is climate change risk due to rising seas, storm surge and the potential loss of property in coastal communities.

In 2013, hurricane Sandy delivered a wake-up call to many about the danger to real estate as a result of hurricane force winds and storm surge. This past summer it looked to be Florida’s turn. Hurricanes Irma and Maria threatened to make landfall in Florida with devastating force.

“Florida is in the crosshairs of climate change. Rising seas, a population crowded along the coast, porous bedrock, and the relatively common occurrence of tropical storms put more real estate and people at risk from storm surges aggravated by sea level rise in Florida, than any other state by far.” (1)

While Miami was lucky and did not suffer a direct impact, it was still impacted by major flooding and the long term risk only appears clearer after the storms.

“The sea has begun pushing back, swelling with lunar high tides and storms, reversing the flow in drainage canals and flooding neighborhoods. Rising water infiltrates storm water systems, coastal highways, septic tanks and fresh water wells. Over the past couple of years in Miami Beach, ‘on a bright sunny day, the streets would fill with water,’ twice a day with the tide, Brian Mowry, city engineer of Miami Beach, said. The city’s existing drainage system had created ‘avenues for water to come right into our city,’ he said. Now the city is spending $500 million to hold back the tide and prevent flooding.” (2) 

Even without hurricanes, Florida continues to flood. Why is this happening?

“Scientists say the ocean began rising more than a century ago, averaging an almost imperceptible 1.5 millimeters a year from 1900 to 1990, based on data from a network of federal tide gauges around the country. In the 1990s, the rising sea doubled its previous rate, reaching about an inch a decade, said Sweet. And then, over the past 10 years, tide gauges in Fernandina Beach, Mayport and Key West recorded an increase of about 0.9 centimeters per year, a little more than a third of an inch per year.” (2)

The rate of increase is accelerating.

According to NASA, “Global sea level rise is accelerating incrementally over time rather than increasing at a steady rate.” (3) “If the rate of ocean rise continues to change at this pace, sea level will rise 26 inches (65 centimeters) by 2100 — enough to cause significant problems for coastal cities.”

“Sea level rise is more than doubling the risk of a storm surge at this level in South Florida by 2030. For the hundreds of thousands of Floridians holding 30-year mortgages, that date is not far off in the future.” (1)

Six million people are at risk in south Florida.

And this is the real danger to retiree financial plans. The loss of a house or property could lead to a massive loss, creating a hole in their portfolio. Many people do not carry flood insurance. In Houston, nearly 60% of houses damaged or destroyed by the extreme flooding as a result of hurricane Irma, did not have flood insurance.

This danger was highlighted by a recent study. “Some banks are cutting their own climate-change exposure by selling riskier disaster-area mortgages to taxpayer-supported entities (FNMA/FreddieMac). That puts the health of the mortgage market at risk, a potential repeat of the financial conditions at the root of the banking crisis a decade ago.” (4)

It is critically important to understand the expanding definition of risk resulting from climate change. Retirees need to take an active role in managing their risk, and work with advisors who can help moving forward. Addressing large potential risks can improve long term performance. 

If you want to discuss these issues or learn more please feel free to contact me.

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

To learn more contact:
James Cox
Cell: 267 323 6936
First Financial Group 150 South Warner Rd.  Suite 120 King of Prussia, PA 19406

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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7101 Wisconsin Ave Suite 1200, Bethesda, MD 20814 301-907-9030 Securities products and advisory services offered through PAS, member FINRA, SIPC.  CA insurance license #0I64535. First Financial Group is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 

2019-89827  Exp 11/21