Building Climate Change Into Your Early Retirement Plans // Our Next Life // early retirement, financial independence, FIREwe've learned

Building Climate Change Into Your Early Retirement Plans

As much as I talk about rising health care costs and uncertainty about which social programs will still exist by the time many of us reach traditional retirement age, the truth is that the far greater threat to financial solvency for early retirees is climate change. And people don’t need to agree on why it’s happening to acknowledge that it is happening. The United Nations’ Intergovernmental Panel on Climate Change recently released a horrifying report on what we’re likely to face, with severe effects coming by 2040, just over 20 years from now. We won’t even be traditional retirement age by then.

But this isn’t a hypothetical future event that may or may not arrive. In the report, the panel makes clear that climate change is already happening. It’s here, and it’s getting worse. As Vox put it, this new report “slams the door on wishful thinking.”

So here we are. Sea levels are already rising, we’re already seeing more and increasingly severe hurricanes and winter storms, droughts are longer and more devastating, and both water and food shortages are already a reality in many places. (Cape Town, South Africa, recently came this close to completely running out of water, an event they termed the most apocalyptic “Day Zero.”)

Undoubtedly, those of us who save money and prepare ourselves financially for the future will be far better off than most people in the world when the truly horrific effects of climate change arrive, but that doesn’t necessarily guarantee that we’ll be well prepared. Will the FIRE community eventually be forced to become one big roving band of RVers, scouring the desert wasteland for resources like Mad Max, but without the violence? Only time will tell. (I call dibs on the guitar guy, though. He’s definitely riding with us.)

If you’re like me, you don’t want Mad Max to be your only option. And that’s why it’s worth making sure that you’ve thought through what climate change will mean for your early retirement and traditional retirement, and then account for it in your financial plan.


Climate change is a big topic, and it has the potential to have a huge range of economic impacts on all of us. This is a research-packed post, so I encourage you to look at the resources linked for much more information than I’ve included here. Let’s dive in.

Low-lying areas are most at risk

The most visible effect of climate change for much of the world’s population is sea level rise, and it’s already well underway. When I visited Miami last year, there was standing water in many of the streets, and locals assured me it wasn’t hurricane-related, but was just “king tide.” And Miami’s fresh water supply is already jeopardized by rising seas, with salt water regularly infiltrating it. New Orleans, despite new fortifications since Hurricane Katrina, could be all but washed away in another big hurricane. New York City may be facing major floods as often as every five years. Or large parts of it could even be underwater full time. At least one California beach community is considering a retreat from the coast.

And every low-lying coastal region in the country (really the world) will be affected.


The map above represents what will happen if the ice caps melt entirely, which isn’t expected to happen in the next few decades. But if you’re interested in seeing what projections are for your area or your prospective future home over a shorter time horizon, you can look at a whole range of scenarios on the NOAA Sea Level Rise Viewer.

ACTION STEPS: Ensure you aren’t planning to stay put or move to a place that is likely to be underwater or affected by king tides. If you are, make sure you have adequate reserves so that you can afford to move and continue to be comfortably housed even if you aren’t able to sell your property. Remember that homeowners insurance will never pay for you to buy a home or rebuild somewhere else if your home is destroyed, only where it had been located. Suck it up and pay for flood insurance, something two-thirds of the 41 million Americans who live in flood plains don’t have. And if you enjoy world travel, visit those low-lying and glaciated areas soon, before they’re gone.

Higher, inland areas are affected, too

The bummer news is that you can’t just move somewhere inland and assume that you’ll be insulated from the effects of climate change. Large parts of the western U.S. and Midwest are projected to have increasingly long and severe megadroughts, which you can in more detail with this NASA megadrought visualizer. Megadroughts mean less water for drinking and household uses, and it’s not unthinkable that desert cities like Las Vegas and Phoenix could face their own Day Zero water apocalypses in the next couple of decades. But severe drought also increases wildfire danger, a terrifying prospect for those of us who live in mountains and other fire-prone areas and already have fire on the brain at least half the year. (At the USAA mini-conference I attended before FinCon, they asked everyone in the room what they’d grab if they had 30 minutes to evacuate ahead of a natural disaster. Nearly everyone looked panicked, and started listing off things, only to realize later they’d forgotten something important. Those of us who live in wildfire areas didn’t have to think about it, because we keep our evacuation bags packed until snow is on the ground. My answer: “Grab the two bags by the door, put the dogs in their carrier, get our laptops and peace out.” When you live in a wildfire area, the fear of fire never leaves your brain.)

In California alone, more than 2 million households (that’s 5-6 million people) are at high or extreme risk from wildfires, with another 715,000 households in Texas, 366,000 in Colorado, 234,000 in Arizona, 171,000 in Idaho and 150,000 each in Washington, Oklahoma and Oregon. And if your house burns down from wildfire, it’s the same as with flood insurance: your insurance will only cover rebuilding in the same place, not relocating.

Droughts and fire aren’t the only threats in the country’s interior. We’re also seeing an increase in damage from tornadoes and hail. This chart from III shows a noted increase in damage from “convective events,” which includes severe storms, hail and tornadoes.


ACTION STEPS: Make sure you’re aware of the risks where you live or plan to live. Prep your home to give yourself the best possible chance of withstanding whatever natural disaster is likely in your area, and regularly check in on your homeowners insurance to make sure all the likely events in your area are covered. If you live in wildfire country, maintain your defensible space diligently and take additional steps to protect your home. Know how you’ll evacuate and what your backup housing plan will be if it takes a few years to get your home rebuilt. If you live in an area with hail events, make sure you maintain your roof well, and invest in storm windows. If you live where tornadoes are likely, have your roof strapped to your house by a professional and prep your interior and exterior so you’re ready when storms hit. Inquire about where your city and region get your water, and look into how sustainable that water source is given the climate change projections as well as whether there are backup options. Consider moving before the water runs out and property values plummet. And no matter where you live, stockpile water, at least three gallons per person per the recommendation, but more is better.

Where you live will matter for more than just weather events

Climate change is already affecting people’s health in a range of ways that vary by region.


Just ask anyone in the Western U.S. how much wildfire smoke they suck down in the summer, or ask pretty much anyone anywhere about the record high summer temps. And that stuff matters, and is worth considering for your own long-term health. But it’s not the biggest problem.

The biggest issue is how your local area or region responds to the effects of climate change, by putting emergency response plans into place, improving infrastructure and otherwise planning for the worst case scenario, and accounting for factors like income inequality and health. This Environmental Protection Agency study maps out the most and least resilient counties and finds that, “areas like Appalachia, the southeast, and western Texas are on course to suffer far worse than the average American,” thanks to a lack of local resilience and an unwillingness prepare for the inevitable. It notes, “The state of Georgia, for instance, is no more at risk from climate impacts than the average state, but is nonetheless acutely vulnerable to climate-related events, thanks to less-stringent building codes, a high number of vacant structures, and old public infrastructure.”


It’s worth looking at the resilience rating of your county, and considering what other parts of your state may be facing that could strain resources. For example, living at 6,000 feet in Tahoe, we’re not in danger from rising sea levels – but a huge portion of our state is, and that’s bound to cost a lot of money as communities figure out how to cope with that or to deal with disasters, all of which will draw resources away from things we need, like wildfire protection.

Unfortunately, there’s a lot of dumb advice out there on this particular question. For example, this Business Insider story lists a bunch of places where you can “escape” climate change, but nearly all of them are directly threatened by it. For example, NRDC says Phoenix will be uninhabitable, NASA says Denver and Salt Lake will be in a persistent megadrought and NOAA says most of Portland, Seattle, San Francisco, Baltimore and Philly will be underwater. But, like, they have parks and stuff, sooooo.

ACTION STEPS: Research your county resilience and potential climate impacts to your whole state, not just where you live. Consider whether the health effects that are likely to worsen are things you can live with. Decide if you’d prefer to deal with your local challenges or relocate.

Insurance may not protect you

It’s getting more and more expensive for insurance companies to do business, given the escalation of natural disasters around the world. The National Association of Insurance Commissioners reports that, “According to a study by Munich Re [the world’s second largest reinsurer], extreme weather events (such as prolonged droughts, hurricanes, floods, and severe storms) led to $560 billion in insured losses from 1980 to 2015. Experts predict climate change will continue to intensify the frequency and severity of these types of weather related events.”

The loss trends that are already affecting insurance payouts are quite clear, per III:


None of that should shock anyone who’s paying attention to world news, but what is shocking is how little attention insurers are paying to the impacts of climate change. A HuffPost story on insurance and reinsurance companies shares this:

Cynthia McHale, director of the insurance program for Ceres, a nonprofit group that pushes investors to pay attention to the financial risks of climate change, said in an interview earlier this month that neither insurers nor their government overseers have a good handle on the risks that climate change poses to insurers’ various financial assets. McHale compared the situation to the one faced by big banks in 2008, when few sufficiently realized the magnitude of potential losses from the U.S. property bust.

If the magnitude of climate change is not built into insurance pricing in short order (it’s currently not), and if insurance companies don’t substantially increase their reserves (something that will almost certainly have to be driven at the policy level), then insurance companies may simply be unable to pay out when disaster affects you, or they may go under entirely. The federal government can probably handle a few bailouts of the insurance industry, like when they bailed out AIG in 2008, but that can’t happen an infinite number of times.

It’s not remotely unthinkable that you could end up in a situation in which your home or property is severely damaged or destroyed in a natural disaster and either your insurance company is unable to pay the full cost of your claim, leaving you on the hook for much of it, or your rates go up so dramatically that they bust your budget.

ACTION STEPS: Maintain solid insurance on all your property, but do what you can to self-insure as well, and to build in contingency plans in the case that you lose most or all of your home equity in a disaster. Factor in costs that increase faster than inflation in your future budget projections, especially for all forms of insurance (including health insurance).

Investments may not perform as hoped

Anytime we talk about future market performance, it’s all a guess, and we have no way of knowing what will or won’t happen. But if you have millions of people in the U.S. displaced by rising sea levels, most of whom will now be out of work, that will place enormous strain on our economy. Productivity will go down, with fewer people working and less overall economic production. Those people who are out of work won’t have a paycheck, and therefore won’t spend as much, which will bring down corporate profits, share prices and dividends. Those unemployed folks also won’t contribute to their 401(k)s and IRAs while out of work, meaning less demand for shares. We have no way of knowing if we’ll have lots of people out of work for a short time or lots of people out of work for a long time, because we don’t yet have any sense of how our government is going to address climate change, and that will make a huge difference in how badly climate change hurts the economy.

But even within the financial services sector, which is not run by politicians, action has been incredibly slow to come. According to the HuffPost, “Many of the largest U.S. investment funds, including pensions, are doing nothing to protect their investors’ savings from the financial risks posed by climate change, according to an analysis by the Asset Owners Disclosure Project, a nonprofit. At least 117 American funds, with a combined $4.6 trillion in assets, have taken no action to mitigate the risks associated with a warming planet.”

With the financial services sector not (yet) taking action to protect investors, the federal government not yet signaling how they will address widespread coastal flooding and increasing natural disasters, and the possibility for global famine and long-term recession, it’s impossible to say what will happen to share prices, but it’s foolish to assume it will be business as usual forever.

ACTION STEPS: Contact your investment brokerage(s) and tell them you want to know what they’re doing to insulate investors from climate impacts. Investigate your bond holdings to ensure you’re not too heavily invested in bonds that states may be unable to pay back if strained by natural disasters. Build your financial models to assume more conservative growth than historical market averages and that allow for higher future inflation. Create alternate sources of passive income that do not rely on market performance.

Taxes could go up

Bailing out insurance companies, paying for more disaster relief, building and repairing infrastructure, potentially relocating entire communities – the federal government and state and local governments could be on the hook for quite a few big ticket expenses in the coming decades. While current tax laws are incredibly favorable to early retirees, that could change if, for example, long-term capital gains taxes go up to pay for increased disaster expenses, or if property taxes go up to pay for fortified infrastructure, an expense that will affect homeowners directly and renters indirectly.

ACTION STEPS: Stay flexible in how your finances are structured so that you can adapt if tax rules change. Or factor higher future taxes into your projections.

Food (and maybe everything) will get more expensive

Even if you live in a place that’s as insulated as possible from the climate effects, the reality for all of us is that things are going to get more expensive. Food prices will be hard to miss. The Global Sustainability Institute’s research determined that food prices will increase four-fold by 2040 over 2000 prices after being adjusted for inflation, and that they are already twice as high as they were in 2000. That’s an effect that’s not entirely visible to most people now because processed foods are cheaper than natural foods, and we’re eating increasingly more processed foods. But at some point, we won’t be able to escape those price increases, and we’ll feel it in our budgets.

The Independent reports that, “Michel Jarraud, the WMO’s Secretary-General, said of all the dangers posed by climate change – from increasingly intense storms and a growth in disease to rising sea levels that may submerge cities – the greatest threat is from dwindling water supplies. About 1.6 billion people already live in areas that are classed as having ‘water scarcity’ and that number is forecast to reach 2.8 billion by 2025. It will go on climbing after that as the planet continues warming.”

That water shortage will likely increase water prices to account for new infrastructure needed, but more importantly, it will affect agricultural regions. For many people around the world, food shortages will be a reality. If we assume that those with financial resources will always have access to food, then you may not be at risk of starvation, but food is likely to get a whole lot more expensive when there’s dramatically more demand than supply.

Could climate change drive other prices up as well? Quite possibly. Most manufacturing requires a lot of water. And carbon taxes could be introduced that raise the price of manufactured goods as well as fuel, utilities and airline travel. Of course, some prices could drop if climate change results in global recession or stagnation that lowers demand in many industries. But for the things we know we all need – most especially food – expect prices to go up. And expect that they may go up for everything else, too.

ACTION STEPS: Factor higher inflation on food costs in your projections. Consider other ways you could lower food costs, like by eating less meat and dairy. Experiment with growing your own food. Keep building the muscle of shopping secondhand instead of buying everything new. Know what you could cut out of your budget if you had to because of rising prices.

Our Approach to Climate Change and Early Retirement

We live in a wildfire zone in a big state with a lot of densely populated coastline. We’re under no illusions about what the future may hold, and climate change been a huge motivation in our efforts to build many layers of contingencies into our plans. We’ve made peace with the fire risk for now, particularly because before we lived here, we lived in LA, where there were any number of things to consider: earthquakes, tsunamis, rising seas, floods from uphill dam failures and – yes – fire. We get small earthquakes in Tahoe, but it’s not considered an area that will get The Big One, so our risks here feel comparatively lower. And given that we’d have some risks anywhere, we’re comfortable with the ones we’ve chosen. We’re happy to be surrounded by several big lakes and reservoirs, something that’s not true everywhere in the West, and we purposely bought a metal roofed house, which is safer for fire. So given that we’re in wildfire country, we have a pretty good setup. And we joke that, if the house burns down, probably also our big trees will burn, and then we won’t have so much shade and can build a greenhouse. Silver lining. ;-)

But beyond our physical location and the structure in which we reside, climate change and health care together have been two big drivers in why we’ve structured our early retirement the way we have. To account for potentially higher future costs and to ensure that we always have a plan B, our financial plan includes:

  • A two-phase approach with early retirement and traditional retirement as separate phases, and our assets stacked to cover much higher spending/expenses in traditional retirement
  • A budget that includes padding that can be cut to accommodate higher costs like food or insurance in the near term
  • A retirement projection that relies only on 1-2 percent annual real returns after inflation, far below historical averages
  • Multiple layers of contingencies to free up capital, like being able to downsize to a smaller home, being able to sell our rental property, etc.
  • A well-funded donor advised fund (DAF), because there are going to be a lot of people in need if global food shortages or mass displacement happen, and we have zero interest in providing for ourselves and helping no one else

Your Turn

Whew! That’s 3600 words on climate change and early retirement. Now it’s your turn, so share your thoughts! How are you accounting for climate change in your planning? What did I miss here?

Psst. If all of this bums you out, here’s a listing of 23 charts that show how the world is getting better. There’s definitely bad climate news, but also tons of good news. AND, Wednesday’s post is the exact opposite of this one: full of happy news and excitement. :-)

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79 replies »

  1. Thanks Tanja – this really made me think. I’m trying to work out if i’m underestimating risks as I’m thinking here in the UK, and London specifically we are lucky to not have such extreme weather.

    Realistically water is probably the biggest risk – but the supplies are well managed at the moment with bans in place when they run low. And it still rains a lot here. I know other parts of the country are not as lucky – there is coastline eroding and lots of flooding near waterways that is increasing.

  2. Our plan is to continue to enjoy the extreme climate variations of Minnesota, for the foreseeable future. I’m royally bummed about our national policy situation, since every day counts and I hate the idea of waiting until 2020 for change. Until then, we’ll keep writing about biking to work, shortening that commute, driving small cars, eating a mainly vegetarian diet, and composting. etc. etc.

    Gators in Kentucky??

    • In no way do I want to suggest “I’m safe in Minnesota” but I’ve thought about climate change before and in lake country, which could have challenges of its own, I still like my odds there. For now though, it’s about saving and learning to enjoy life on less. It actually has been more enjoyable and I’m pretty sure it has for you from what I’ve read.

      • The models suggest that you ARE better off in Minnesota than in many parts of the country. But that shouldn’t stop you from planning for impacts that could still find their way to you economically through the ripple effect.

  3. Thanks for the post Tanja. I used to work in climate change policy and this issue is #1 in my mind when it comes to FI. Thanks for writing in such accessible language about this complex issue. Not enough people are prepared for this so the more we talk about it the better

  4. Great thoughts on additional risks people just aren’t considering as they decide to cut work. It’s so important to have buffers for this kind of thing. You don’t need a back up plan for a back up plan, but you should at least think through it once.

  5. I’m so glad you wrote on this. I continue to be baffled how people can ignore this. Looking at the map and what Chicago will look like (Atlantis?) should be all the wake-up call my neighbors need. Oof.

  6. the first thing to do is to vote out the party – reps who believe that climate change is a hoax – remember on November 6 to vote for those who will help fight climate change

  7. Good time for a wake-up call. We looked into a number of environmental and geographical indicators when we moved to our most recent home, with earthquakes/liquefaction being the primary concern. The resilience index is new to me though, and I’ll look forward to digging through that report. Thanks for raising awareness.

  8. First thing is to get out and vote to make sure your voice can be heard. Second is looking at things you can do on a daily basis. For example we have been eating less and less meat the last little while. Meat production has a huge carbon footprint. If we all together reduce our meat consumption by 10% that’s a lot of CO2 reduced!

    • If things do get as bad as some say I really doubt that you can count on more insurance to solve your issues.

      I’m also really tired of those who constantly talk about the politics of preparing for climate change. When do we as individuals start to take actions that actually will matter. This is everyone’s problem to fix, and no politician is going to be the answer.

      I’m just leaving Denver after a four day visit and was amazed at two things:
      The building/population growth and the amazing lack of solar power. If we can’t even use solar here with 300 days of sunshine, you have to ask why. And why would we continue to overpopulate an area that will end up with water shortages. Are we attempting to just add another California to the US?

      Sorry a good post, but the answers have to be bigger than buy more insurance or vote someone in or out.

      • Other than flood insurance, which way too many are neglecting to buy, I am not advocating for more insurance. What we do to slow climate change is a different and bigger topic, but that shouldn’t stop us all from preparing ourselves for the effects that are coming.

  9. Seeing not only NJ completely disappear but Philly go completely submerged was definitely an eye opener. We’ve sort of joked about our riverfront house becoming just a river house in the future and planning for the need to take a boat to the car, but seeing that graphic makes it not quite as funny or as unlikely. The one thing that we have talked about is our house going to $0 or being purchased outright for pennies by FEMA or the local government and being zoned as no longer habitable. We don’t consider our house in any net worth calculations or as part of our future financial plan since we when we built we put in as many age-in-place features as possible. But I think everyone when they purchase a house expects to at some point be able to get something out of it when they move. We’re in a situation where we’ve needed to consider the possibility that if we live here long enough that climate change impacts the ability to live here, that won’t be the case. We’ll essentially have a house that is unsellable. Hopefully it doesn’t come to that. But you know what they say. . . Hope is not a COA.

    • The super dramatic graphic shows all the ice in the world melting, and that’s not happening in the next few years. But still, all of this IS dramatic, and we should treat it accordingly. You guys are SUPER smart to not factor your home value into your net worth and to recognize the reality that people may not be able to recoup their investments in property in affected areas.

  10. 👏 👏 👏

    Climate change isn’t an if. It isn’t a when. It’s right now. SO glad you are using your platform to talk about this! And again, this is why I’m so passionate about the work that I do – we are beyond the point of cautious action and into the age of needing to make big, giant leaps in order to mitigate the worst. And, as you’ve laid out so well here, there’s a lot that’s beyond mitigation at this point.

    • I know there will be people who interpret this post as political, and it’s not meant to be. It’s just reality and a question of what each of us will do to get ready. In addition, it’s a very good question what we should each be doing to combat climate change, but I purposely stayed out of that topic here. ;-)

  11. This is a great post. we have been thinking a lot about this. I even came up with a resource triangle concept: we can have only 2 out of three: water-food-energy. We can use one or the other to make third, we can’t have it all.

    In our home we are making huge improvements on our own footprint and resource use, growing our own food, minimizing waste, but the one resource we can’t cut the use of is water. This is and will be the biggest challenge of humanity.

    • It’s great you guys are doing so much to lessen your impact. This post is more focused on what to do if the predictions come true, but the more of us who can reduce our impact, the less of this all we may have to deal with in the next few decades.

    • I am curious to hear why you think you can’t reduce the use of water? I understand that you are not able to completly cut it off.

  12. First off, I just finished reading an extensive review on the latest IPCC report. The representations in the press are, as per usual, filled with misinformation and outright nonsense. The latest report includes a great deal more real data, not just computer models. The IPCC are also, finally, including information relating to several volcanic eruptions in the mid-late 1880s which made the world cooler for a short period of time. The IPCC itself is now saying part of the whole recent global rise in temperatures is actually natural recovery from volcanic eruptions. All the projections on the amount of increase in global temperatures have been reduced to the point where the alarmist community that makes it living on screaming about doomsday was horrified with and extremely critical of the latest report. One thing that no one reporter in the alarmist media has been reporting on, is the amount of carbon dioxide we can release without causing a catastrophe has been doubled from previous estimates. Therefore, even the scientists who wrote the latest IPCC report are backing off on the gloom and doom.

    Second you are quoting incorrectly when you say things “increasingly severe hurricanes and winter storms, droughts” are occurring. That is also simply not true. Every study on hurricanes for example shows that hurricane frequency and strength is not increasing and in fact is decreasing. What we are experiencing is plain old fashioned weather set in the natural variability of the our planet’s normal cycle. And many scientists are concerned about the effects of a solar minimum and an extended cold spell and associated volcanic eruptions, not global warming. No amount of riding your bike to work, while looking down self-righteously on the schmucks in their cars is going to change things if we have another couple of Krakatoa size eruptions.

    “Denial” (as I’m sure some will call it even though I am a scientist myself and not a journalist making my living on terrifying headlines to garner clicks) aside, preparing for extreme climate events is just plain good common sense. Our community had an EF4 tornado form and touch done less than a kilometre from my house in August 3, 2018. The tornado was 800 metres wide, did significant damage including wiping out 40% of the trees in our 152 acre piece of land we had put into a conservation agreement. (See I do care about the planet even though I am a redneck pick up truck driving “denier”.) We had a tornado shelter in our basement for just such an event and though it missed our house, we were safe inside. We also had no power for the next eighteen hours. We had a generator and our back up solar panel system (purchased for just such an emergency and not because I give a flying fig about my carbon emissions) so our lives were unaffected and we were able to provide aid to our neighbours because we were prepared.

    Far too many people never prepare for and take into consideration extreme weather events or geological catastrophes. If I speak to any of the older-than-me old timers in our community, they can tell me all about the dirty thirties and how awful that drought was. We had horrific flooding on our lake shoreline than destroyed many cottages and retirement homes on the lakeside, the worst in fifty years. But the old-timers in the area warned everyone that lakeside area had been flooded in the past and all those houses would be lost. No one listened and they were lost and many people found themselves without their retirement home. A lot of developers did get very rich before the flood so it wasn’t all bad.

    Being wise about weather and extreme conditions and disasters means being prepared on multiple levels. Think about power being off for days. How will you cope? Think about drought wiping out the crops in midwest for a ten year span. How will you deal with the dramatically increased food prices? Think another major stock market crash wiping out most of the value of your stock. Ask yourself things like “Do I have all my eggs in one financial basket someone else might drop?” And that should be anything from local scale like our tornado to a world wide event like a major volcanic putting us into the six year winter. I’m not suggested things like putting six years worth of MREs in your basement. I am suggesting being mentally prepared and informed with a positive plan you can put into place. Follow the explicit directions for advance preparations of your government like a go bag, kennels for your pets if you have to evacuate, and three days worth of food and water. And read your home insurance policy very carefully and be certain you are covered. I recently added earthquake insurance to my home policy because if I am traveling to Utah and I lose my RV in a earthquake, I am not otherwise covered. SO I bought earthquake insurance even though I live in the least seismically active spot on the whole continent.

    None of this requires requires running around like Henny Penny screaming at your neighbours that the sky is falling or that the government must tax us all to redistribute our wealth in order to save the planet. It requires being aware of what might happen to you and being prepared for it if it does so when FEMA screws up again, like it did after Katrina, you don’t starve or die of thirst after your home has been destroyed.

    I apologize if I sound unduly cranky and irritable about climate change and carbon emissions and self righteous people who think I need to pay carbon tax and ride a bike but they don’t have a go bag, a back up power source, or a kennel for their dog. I try not to be, but some days I just can’t help myself.

    • I’m curious if you read the actual report, which is quite clear and is not being misreported. I’ve also showed several charts here from the insurance industry that back up the fact of more and increasingly severe storms. Nonetheless, this post is specifically not about causes of climate change, and I’m not interested in debating that here. The point is how we can each be prepared, and you seem to agree that preparation is a good idea, though that preparation should include more than the basic “be prepared to lose power and water for a few days.”

      • I read large portions of the report as well as some analysis/reviews of the report. Not once did I see any of the media reporting on the fact that our allowable carbon before total death and destruction has been doubled from previous reports. Nor did the media report on the anguish of the alarmists over the report being too moderate. Your statements that hurricanes and drought are getting worse are demonstrably wrong. There are issues with humans moving into regions that are at high risk for hurricane damage and wildfires, which is rightfully reflected in increased insurance claims and rates but that is not due to climate change: that is due to humans moving into new areas and doing things like draining and levelling coastal mangroves and putting in condos in their place. Even so, there has been no increase in severe hurricanes and no increase in droughts on a historical level. In any case, it just makes good common sense to be prepared for all kinds of disasters both long term and short term. Some of the commenters here restricted their comments to simple self righteous bashing of anyone who does not adhere to their particular viewpoint on climate change. Riding a bike to work is not going to stop a hurricane storm surge or protect someone’s home from a wildfire.

      • Oh and the report has multiple levels, there is the summary report and the actual scientific background to the summary report. Did you read the background to the summary report?

  13. Thank you for this post — it’s both important and digestible. I have been thinking a lot recently about how the FI community largely ignores climate change as a factor in planning for the future. I’m not sure why this is, but I hope this post promotes more consistent discussion. Climate change makes me a lot less confident in the predictive ability of past stock market performance for future earnings. I’m accounting for this by planning for a withdrawal rate closer to 3% and building up the passive income stream from my side hustle.

    • My suspicion is that anytime you talk about climate change, political attacks come fast and furious, or other attacks come your way. (Just scroll down for proof of this right here!) So I get why people avoid talking about it. But I can handle cranky people and their comments, so decided it was finally time to get this discussion going! :-) And your withdrawal rate approach seems super smart as a big hedge against the future financial effects of climate change. Worst case, you’ll be better prepared than many, and best case, you’ll end up with more cash. Win-win.

  14. This is why in Canada we are fortunate to have the Green Party at federal/provincial levels with options for the public to try and make a difference at the highest levels. Although not everyone is on board with the likes of the push back with recent wins by Trump clone Doug Ford and the wave of anti-climate legislation on the prime oil producing provinces.

    Good things are changing though, there were elections across BC this weekend. The majority of those elected were all in support of sustainability and environmental protections, heck Vancouver (one of NAs largest cities) just elected a new mayor who was arrested for protesting at the Kinder Morgan pipeline that is still challenged the federal courts (he was a Member of Parliament earlier this year but stepped down to run for mayor).

    I would like to add though that sustainability, pollution and environmental encroachment are my biggest concerns. By tackling them first we actually begin to tackle the climate concerns.

    • All of that stuff is good to engage on, but given that huge industrial powers are still doing nothing to curb emissions, we all need to be prepared in the case that nothing happens to slow climate change’s impacts. Which is a bummer, but it’s like preparing for anything else financially.

      • Don’t get me wrong, I am fighting for climate change awareness every day to my friends, families and followers to the point of being challenged and many of my old friends from my past life disconnecting from me. I am also preparing my lifestyle and decisions along the way.

  15. Tanja, thank you for writing this. I’ve been thinking about many of the same items you have discussed, and how to account for them in our saving plan. Regarding location, it helps that we live 3 doors down from the two of you so hearing your thoughts on location risk is very useful for planning. I think the FI community, and blog and podcast creators should put significant time into this. I would love to hear more about guesses on how this will affect the 4% rule of thumb. I had already made plans to not go any higher than 3.5%, and may consider saving for more of a 3% game plan. Even then, having 33X planned yearly spending doesn’t put me at ease if I have no idea what may happen with inflation and taxes should some of these projections actually come to fruition.

    At this point, I think it is clear that anyone that really puts work into a Fi game plan should not own property that could be under water in the next 20-30 years. Property values could be hit in anticipation of this event far before it actually happens, as acceptance of the probability finally starts to hit the masses.

    But as you mention, the more widespread danger is drought on a global level. My biggest concern, and you diligently cover, is how we will feed and hydrate the rapidly rising world population while still trying to have an economy that will produce market returns. Will we be able to do both? Even if so many people, including political leaders are in flat detail about the problem?

    I really hope that this subject becomes a more commonplace discussion in the FI community. As Tumpleweedstumbling suggests above, even a “redneck pick up truck driving “denier” can find common ground in the aspects of being personally prepared for unprecedented changes, so that they may help others who may not be.

    Thanks again for writing this post!

    • Thank you for the nudge to write it! I already think 4% is too aggressive even without climate change, and would argue for 3.5% under business as usual circumstances. But given all the extra unknowns this introduces, I think 3% is probably necessary for most people. That said, that’s a gut level reaction and not based on solid math. Maybe we can get Big ERN to do an economic model for this. ;-) And yes to not having low-lying property! There’s no harm in being prepared, so I would hope that this is a discussion the FI community can have without all the usual political insult flinging.

  16. This is an awesome info packed post. There are so many thing in here that I need to take into consideration for the future, including where I’ll eventually want to settle down, if I choose to purchase rental properties, expenses to take into account, etc. It was encouraging to see that a few places I have in mind for future places to lay down roots are in zones with high resiliency! I like the plan you have to combat some of these risks and don’t get mad if I steal some of your ideas! 😉

  17. Why not also be a part of the solution? The FI community more than anyone should have the resources. Do you have an electric car? Why travel (fly) so much? Travelling (flying) is not necessary for a happy life. I like most of what you write, and this was all good advise. But it is hard to take you seriously when your not serious about helping reduce your carbon footprint. Particularly your continued desire to travel.

    • That’s not fair @Taylor… T and M have only taken a few trips since retirement and in fact by retiring, they’ve grounded themselves from TONS of flights required by her former job… so that’s an improvement. Travel in general is an interesting topic concerning environmental change… and I wonder if I need to plan differently– will flights be outrageously expensive? Will destinations be less attractive (ie, no reefs?). Just this Thanksgiving, my plans got canceled due to hurricane Michael and even though I had insurance, it did not cover that event… so maybe looking into better insurance coverage for travel. Lots to think about.
      Thanks Tanja for a great post!

      • Thanks, Leanne. Very true about cutting out the flights. My travel this year is a small fraction of last year’s. And you’re so right that travel is an interesting topic that seems to get lots of people riled up. There’s often the suggestion of switching to an electric car, but rarely the suggestion of finding ways to make air travel more efficient, which it is in fact becoming. The old gas-guzzling planes are being retired and newer, lighter, more efficient planes are becoming the norm. We’re never going to stop traveling, but will focus on finding ways to lessen its impact. And, as you said, to make sure we have contingencies in place in case natural disasters disrupt those plans.

    • Spot on @Taylor. Tanja had no problem flying back and forth from Tahoe to DC for years to earn a high salary while contributing to global warming as a consultant. Now she tries to take the high ground and claim that we all need to do something about global warming that she was very much a part of creating!

    • I deliberately left the solutions discussion out of this post to avoid getting into a political quagmire. I also don’t think enough action will happen fast enough and we’ll be faced with the worst projections, at which point the environmental scorekeeping will do little to protect any of us. But since you asked, here’s what we’re doing to keep our carbon footprint low:

      1. We don’t have kids. This is by more than an order of magnitude the most anyone can do to reduce carbon emissions.

      2. I quit the job that forced me to fly so much. We’re flying vastly less now and packing more in when we do fly.

      3. We keep our house cold in the winter and don’t have air conditioning.

      4. We drive as little as possible, and most days never touch a car.

      5. We do as much zero waste shopping as possible.

      You’re entitled to your opinion of what makes a happy life, and if you feel better by judging our choices, fine. But for us, a life without travel isn’t a happy one, and we do what we can in all other areas to offset that impact.

      • Didn’t mean for my comment to come off judgy. Sorry it turned out that way. I just think solutions are just as important as preparing. I think you agree with that.

  18. I too reacted to the suggestion of world travel. If we all could stop, or at least reduce our fossil fuel footprints and not rely on insurance and money to do the trick, we might not get the Armageddon scenario. Eating locally produced food and recycle more is just a start. But I guess the US and other western countries mentality is everlasting growth and keep consuming til you drop, or drown in your coastal flooded backyard.

    • See my response to Taylor. This post is not about solutions, it’s about individual preparedness. And people wanting to see Iceland’s glaciers or Micronesia’s beauty before they’re gone doesn’t make them bad people.

  19. Great post Tanja. We plan on moving in the next few years, so this very topic has been on my mind lately.

    Even if we avoid flooded areas, there’s likely to be huge impacts to almost any community as humanity moves and adjusts to change. Much of our population lives near the coast right now and they’ll likely need to move. Where exactly will they go? It’s going to be disruptive to the status quo.

    I also think you’re smart to build in some extra padding and to reduce your return expectations. This is something I’ve been preaching for a very long time.

  20. I would live to see some FIRE folks run for public office. Climate change is coming for all of us, but we act in very short sighted manners. However by completing FIRE you have a long term vision.

    I think you are right with more expensive everything and taxes will have to be as well. I’ll consider Roth again.

  21. Our liquefaction zone is exactly why I refused to keep our last property in the area as a rental: I’m not cut out to manage that level of risk exposure – two properties on faults that will basically be wiped out if the Big One hits? If we all survived that one, I’m positive I don’t want to deal with that aftermath.

    I’ve been pondering on exactly this lately – change is already happening and the only questions are whether we do anything at all on a large enough scale to slow it, but it’s definitely happening.

    With that in mind, I’ve considered quite a few of these but I’m not sure that I’m satisfied with our answers yet, so I’m still tinkering with our plans and assumptions. It’s useful to have the whole shebang in one gigantic checklist ;)

  22. Excellent points and there are plenty of climate related aspects to bring into the FI planning, it really isn’t that simple. We’ve debated moving many times, but find it hard to sway us from moving away from Michigan based on climate change predictions (along with the other perks of living here). Thanks for bringing up this discussion in the FIRE space.

  23. Hi Tanja,

    Thanks for the thoughtful post (as usual)! This question is more on the mitigation side than the preparedness side, but I’ll ask anyway: have you and Mark looked into any index funds that are specifically targeted towards renewable energy / “clean tech” / “green tech”? I know you’ve mentioned before lobbying your current funds to drop specific companies, but I’m curious to hear your thoughts about investing specifically in “good” companies.

    I’ve looked into a few options recently, and the (somewhat predictable) problem is that a.) they tend to charge higher fees, and b.) at least in recent years, haven’t been performing as well as broader funds. But at the same time, I struggle with wanting to put my money where I feel like it has the best chance of making a difference – something of a dilemma.

    Thoughts from any other FIRE folks would also be appreciated!

  24. Ok- a story and a response:
    First, when we were in undergrad (a long time ago) we had to evacuate our apartment. We had two cats at the time, and no cat carriers… we evacuated them in a laundry bag (it was 4am, which explains the poor decision making). Nothing makes you feel like a horrible cat mom like a writhing, screeching laundry bag full of pissed off cats… So kudos for having dog carriers at the ready.
    Second, we have a stretch of land. My current struggle is growing my own food, and I’m hoping to get that figured out- I am making progress each year, and we’ve only had the land for 2. I have a generator (live in the country) and my appliances run on either propane or electric.
    That said, I recycle, compost and try to use my car as little as possible.

  25. Well I guess the scientists have now figured it out. They know for sure what will happen in the next 20 years. Don’t they always say that? I’m old enough to remember them predicting with certainty back in the 70’s that the world was getting colder and we had to do something about it. Something like covering the polar ice caps with soot or some such black material to reverse the trend. I’m also old enough to remember the population bomb, peak oil and always put a baby to sleep on their stomach. Now they say you should always put a baby to sleep on it’s back. I also chuckle when they say our models predict it will be a very active hurricane season then we end up with nothing. They also predict a lot of rain for the west coast due to an el nino in the pacific just a couple years ago and it was a dry winter. Then the following winter we got a bunch of weather they did not predict! They can’t tell us with any high degree of certainty what the weather will be next week or tomorrow. But they sure do make a prediction on the news every night. Anyone remember going to a worlds fair and seeing the exhibits that showed you what the future would look like? Nothing like it does today. Now all these people run around telling you what will happen. Give me a break. The same smart scientist say that nothing we do is really going to change their dire predictions. We can all do better for sure. Use less and waste less, recycle and conserve. But don’t tell me the science is settled, I have heard that way to many times. You don’t know what scientific discover will happen in the future. Tell me you know what will happen in the future and I’ll get you a job as a weatherperson. Think about that……

  26. I never comment on blog posts, but I feel compelled to now, because of how amazing this post is in a very realistic-pragmatic way. This is the kind of stuff that keeps me up at night (in addition to the absolutely gut-churning current political situation of our country), and I love that you address it in such a logical and research-driven way. I float around the different FIRE blogs and podcasts periodically, but the things that are always in the back of my mind that I don’t feel are adequately addressed are (1) the ultimate long-term consequences of the increasing deficit on our financial plans, and (2) climate change. So, in short – thank you! I love that I’ve finally stumbled across something like this that addresses what so many are ignoring!

  27. Amazing, in depth post! It makes me want our forever home even more, and not the starter home we just bought. But even so, owning our own place with a garden to grow food and a good distance up from the sea is a good step in the right direction if the worst should happen faster than we expect and we get stuck in that house for the foreseeable future. One of the challenges I see the most often is that people confound climate and weather when they argue against climate change. Climate = trend over 30 years or more. Weather = what’s outside your window right now. Big difference, both in effect and how it is predicted/modelled.

    But thank you, Tanja! This is a great, pragmatic post really highlighting some prime concerns on the matter. It never hurts to be prepared, does it?

  28. Great article, thank you. Regarding the investing angle, are you familiar with the company Macroclimate? It’s a divestment-investment company. They avoid investments in fossil fuels, deforestation, etc. Looks interesting:

  29. I loved your post. I work in the environmental field and when I look at houses near the coast I am always thinking what a nice natural pool they will have in their future in their garden. I actually think the location of your housing is extremly important from a fire perspective. It annoys me to see municipalities allowing construction in flood prone areas.

  30. This is something that crosses my mind a lot and I dug into some research last year on specifically where my family is choosing to live for the long term to see what our risks were. I came away thinking the part of San Diego where we reside should be OK though we should expect to get warmer and wildfires become more frequent. And I expect droughts in the southwest to get more prolonged which could cause some significant increases in the cost of water. I also read a report that long term we can expect returns on the stock market after inflation to settle into the 2.65% area – I had saved enough to follow the 3% rule long term with cushions built into costs of health care and other areas, as well as an overall increase in spending down the road but with 2/3 of my stuff dependent on stocks and bonds (I have a 70/30 split), it got me thinking. I could build an accessory dwelling unit (in my case, a garage apartment) for Air BnB /VRBO purposes and get a decent return on investment based on the current data spit out by those companies based on average occupancies and rental rates. Current cost of labor and materials is super high so I’m not in a rush to pursue this plan further but did spend time walking through numbers with a contractor friend.

    I didn’t deliberately plan on having 2 phases for my retirement but I did create a plan that threw off enough cash flow where I didn’t rely on selling shares to live though I felt that if I made it to 80, I wouldn’t stress about selling shares here and there :). I also don’t plan on accessing any of the retirement accounts before traditional retirement age. By keeping my principal intact and not accessing retirement accounts, I should have a larger base when I hit those later years which should allow for those inevitable increases in expenses.

    I think the cool part of the FI community is that many of us do care deeply about the environment and in so many ways walking away from our professions allows us to exert more energy into doing more environmentally friendly things whether it’s directly getting involved with certain causes or just making lots of small changes in our own personal consumption or transportation habits or even doing energy efficient and water efficient overhauls to our homes. For example, we collect rainwater from our roof for our garden already but I am currently trying to figure out a system where we can flush our toilets with that rainwater and wash our clothes with it, when we have it. It doesn’t look super complicated but it’s taken time to research and because I’ve not ever done anything like this before, when I do finally take the next step to do this, I know it will take a lot of time and effort.

    • Oh goodness, you should ignore this comment if you ever see it, Tanja. I clearly had too much coffee and too many things in my brain that morning to stay on topic.

  31. My approach to financial independence is quite different from that of most people currently traversing this path. I’m striving to achieve a triple bottom line equally valuing people, planet, and profit on my quest to achieve financial freedom. I’m eschewing mainstream index funds and rental properties in favor of investing and generating income in ways that align with my values. That means that some of the money I have and will continue to invest has been directed through crowdfunding websites such as Wefunder to companies that can help reverse global warming. In this way my investing is part of the solution as well as a way to mitigate against the risk of a decline in stock market returns.

    I have some money invested in a socially responsible mutual fund and will probably put a little more in a couple others, but don’t feel great about that as most of those funds still include companies such as Microsoft, Procter & Gamble, Glaxo Smith Kline and others that push products and practices I don’t want to support. For the time being though, these funds allow me to vote with my dollars while I wait for better options to be developed.

    I’m working to establish a local lending club along the lines of the Slow Money model in my area to support sustainably-minded businesses and create a more vibrant and resilient community and economy.

    One of the largest investments I’ve made is the purchase of a share of a local permaculture farm. In addition to the eventual financial returns, my investment in this 10 acre farm entitles me to free produce and plants when I visit, a free place to stay when I want to retreat from the city, free access to all of the high quality permaculture and other courses at the farm, and a “bug out” off-grid retreat should the “sh__ ever really hit the fan.”

    I also put more emphasis than others do on the additional forms of capital that surround us beyond financial capital. These additional forms of capital help me recognize that I have access to much more wealth than one might think. Natural capital plays a significant role in my strategy. I grow some of my own food and sell plants I’ve potted in compost I created from produce I rescued from dumpsters in my backyard plant nursery. With my intellectual and experiential capital I’ve accumulated knowledge and skills that will enable me to earn money providing goods and services to those that haven’t acquired the resiliency skills I have. The social capital I generate through volunteering and participating in my local Time Bank connects me with people who help me with a variety of tasks for free and leads to life long friendships.

    As I stated initially, this is a very different approach to FI, but I offer it here as food for thought to anyone who is interested.

  32. Wow! So timely. I have a guest post coming up and I addressed many similar topics, including what my family is doing and how we weighed certain factors. I’m gonna need to plug you in on that post because you reference a lot more research.

    Things ARE going to change. The question is when and how much how quick.

  33. If I didn’t already love your blog, I would love you just for this single post! I work in the environmental consultancy field in the UK, and am heartened to see any and all awareness raising about this issue.
    I haven’t yet looked into what our (so far, limited) investment funds are doing in relation to climate change, but it is on my To Do list.

  34. Thinking more realistically about this for the past year has inclined me to continue renting for the long term. I don’t want to get “stuck” anywhere that stops being habitable. Even before I started veering away from condo-ownership, I knew that I only wanted to be on the 2nd-4th floor. High enough to avoid the worst of flash-flooding, which is not yet a problem in the majority of DC, but not too high that I risk not being able to get down the stairs in time in case of a fire.


    DC seems like it will be relatively protected from the worst impacts for a few decades. It is partially why I like it here. But come traditional retirement time, it may be too hot in the summer (and most of the year).

  35. 8 weeks ago I had no knowledge of FIRE and had never read a blog on any topic. Then I retired early! This topic really hits home with my top fear. Climate change and its close relations, war and our over populated planet (and impact on resources) are the major things that really concern me. Sticking to the finance implications only (I fully accept there are much bigger problems!) my thoughts are:

    1) I do not think there is anything you can do to mitigate against these risks.
    2) We may all be massively overestimating our SWR as these events are generally not in the past data. Global studies show that losing wars is very bad for markets – anyone for the historic SWR in Germany and Italy for example. But even a best case consequence of climate change and resource plundering could well be at some stage much lower growth leading to the mother of all global stock market crashes.
    3) Chaos and civil disorder are also bad for markets. The SWR for Russia including the 1918 revolution cannot be calculated. There is currently much bad atmosphere over migration in UK, Europe and USA and this could get much worse if places become uninhabitable.
    4) Other income streams may also dry up. In addition to the post, Company Pension Schemes may fail to provide promised benefits as markets tumble and jobs may be harder to come by. Food may also become unavailable for periods of time in addition to being more expensive.

    Tanja, I am loving this blog. Next time I comment I will try and be more optimistic!

  36. I’m a global warming neigh sayer. Just seems odd that global warming morphed to climate change and back in the seventies Time published a magazine that talked about the next coming ice age.

    My understanding is that the ozone layer is better now than thirty years ago, that temps have been about flat for more than a decade and that climate is always changing.

    People can have their own opinions – just not their own facts.

    Love the blog Tonya, keep up the good work.

  37. Gah this post came out at time when I was super busy, but I knew it would be good and I’ve had it on my list to go back and read for MONTHS. Thank you for writing it. There’s a whole lot in here for me to start thinking about.

    I know YOLO isn’t the way to go here, but I’m still tempted to put lots of things on hold to get a bunch of traveling in now, whoops…

  38. Thanks for this post! I’m just learning about FI but am always confused why this issue isnt addressed more by the community, as it will have a massive effect on the investments everyone is counting on and previous market performance would seem to have nothing to do with future performance under climate change conditions.

    This interview was a really interesting (and I suspect accurate) perspective on future finances which I havent heard addressed anywhere before:

    Thanks again!