Allianz Life Insurance Company of North America, commonly known as Allianz Life US, is spotlighting a new concern in retirement planning: extreme weather. As natural disasters increase frequency, they bring new financial risks that retirees and near-retirees may not have previously considered. Allianz Life US aims to change that.
In its latest campaign, Allianz Life addresses how extreme weather events can deplete retirement savings more quickly than anticipated. The 2024 Annual Retirement Study found that 82% of Americans want financial plans that account for economic risks linked to climate-related events.
These numbers reflect a broader trend: more Americans recognize the need for climate-aware financial planning.
Yet, the current approach to retirement planning rarely includes climate risk. Allianz Life’s campaign encourages financial professionals and clients to address this gap.
Lorinda Niemeyer, Allianz Life’s Head of Sustainability, highlights the urgency of this issue. “Extreme weather is becoming more frequent, intense, and costly,” Niemeyer stated. “We see headlines about extreme weather almost daily, but few talk about how it impacts individual finances and retirement savings.”
This need to protect retirement funds from climate risk extends beyond hypothetical situations.
Allianz Life’s study found that nearly two in five Americans affected by a natural disaster had used money intended for savings or investments to recover from or prepare for extreme weather. More specifically, 21% of those affected had to adjust their retirement plans due to weather-related disruptions.
These findings underscore a new reality for Americans planning their retirement. Saving for healthcare costs, inflation, and market changes remains critical, but weather-related risks must be considered now.
While extreme weather impacts individuals across all life stages, it presents unique challenges for retirees. Extreme weather can create substantial financial strain for those living on a fixed income.
Unexpected costs from climate events can derail retirement plans, forcing retirees to dip into savings.
When financial resources are fixed, unplanned expenses can be devastating. Retirees often need more flexibility to generate new income, which limits their ability to recover financially after a disaster.
Consequently, Allianz Life has focused its campaign on retirees facing the most significant risks from these unplanned costs.
Additionally, the choice of retirement location plays a massive role in climate-related exposure. Many popular retirement areas, including parts of Florida, the Southeast, and the Southwest, are especially vulnerable to extreme weather events.
Between 2021 and 2023, homeowners’ insurance rates across the United States rose by 35%, but in Florida, they jumped by 68%, according to the 2023 Policygenius Home Insurance Pricing Report.
Allianz Life aims to prepare retirees for these increased costs. When housing-related expenses surge, unprepared retirees may struggle to maintain their standard of living. Property values in climate-prone areas may also decline, impacting those who rely on real estate equity to fund their retirement.
“As part of our retirement strategy, we help Americans manage risk, including emerging risks that may not be part of traditional conversations,” Niemeyer explained. “Inflation, market volatility, and health care costs are already relevant topics. But now, we must consider extreme weather’s rising costs and financial impacts.”
The financial effects of extreme weather go beyond insurance and property values. Retirees and pre-retirees must prepare for immediate and long-term costs, and rising insurance premiums are only part of the equation.
For example, homeowners may need costly renovations as building codes adapt to climate challenges. Structural upgrades, storm-proofing, and fire resilience are standard considerations in vulnerable areas. These upgrades require financial planning and may strain a retiree’s budget.
Extreme weather events may also necessitate temporary housing. Evacuations due to hurricanes or wildfires often mean spending on motels, food, and transportation. For retirees, these expenses can quickly add up and disrupt monthly budgets.
Health costs represent another area of concern. Events like heatwaves, hurricanes, or wildfires can directly impact retirees’ health, especially those with pre-existing conditions. As extreme weather intensifies, the potential for climate-related health expenses grows.
Although extreme weather affects finances, Allianz Life’s research found that only 15% of Americans with a financial advisor have discussed these risks. Allianz Life’s campaign encourages financial advisors to include climate-related risks in their client discussions to address this.
Niemeyer noted that addressing climate risk in retirement planning is similar to managing other financial risks. Retirees may consider asking questions like: “Where will I retire, and what climate risks might I face?” or “What additional expenses should I plan for to weatherproof my retirement?”
Planning for climate risk requires a careful look at location. Some regions face unique risks, such as extreme heat in the Southwest or floods along coastal areas. Tools like Allianz’s GloRiA (Global Risk Assessment tool) allow retirees to evaluate the likelihood of different climate events in potential retirement destinations.
Other questions focus on health and safety. For example, retirees should consider whether extreme heat, fire risk, or other natural disasters could impact their health. Those with chronic conditions may also need to evaluate evacuation options, as some climate events may restrict mobility.
Preparation costs are another area for consideration. Retirees should plan for potential housing upgrades or rising insurance expenses. A detailed discussion with a financial advisor can clarify these needs.
Allianz Life’s campaign comes when climate risk becomes a more prominent issue across the financial services industry. Climate resilience is now an essential aspect of financial security.
For many Americans, retirement planning has traditionally focused on stable factors like healthcare, inflation, and investment growth. However, climate change adds a layer of unpredictability that requires a shift in perspective. Allianz Life’s campaign seeks to integrate these new realities into a comprehensive retirement strategy.
Allianz Life’s approach reflects an evolving view of retirement. Today’s retirees face new challenges as climate events intensify and costs rise.
In an increasingly unpredictable world, long-term planning must account for the unexpected, including extreme weather. Allianz Life’s commitment to climate-aware financial planning underscores its goal of helping Americans protect their retirement dreams against the storms of a changing climate.
Allianz Life hopes to set a new standard for financial resilience by including climate risk in retirement conversations. As weather events continue to make headlines, the company remains focused on empowering clients with the tools they need to plan for an uncertain future.
Allianz Life’s message is clear: preparing for retirement now means more than financial growth. It means securing financial security against the unpredictable forces of climate change, making this campaign timely and necessary.