A 68-year-old Florida retiree with a $620,000 coastal home bought in 2018 and $980,000 in retirement accounts planned to withdraw about $40,000 annually using the 4% rule. With the mortgage paid off, homeowners insurance became the dominant expense as premiums rose from $4,200 in 2020 to $14,200. That $14,200 line item equals roughly 35% of the $40,000 withdrawal. Earlier warnings included a Florida homeowner, Mike, whose premium nearly doubled to about $6,000 on a $350,000 home. Rising storm losses, litigation costs, and insurer retrenchment have driven 4x to 5x premium increases tied to climate-risk reinsurance pricing rather than general CPI trends.
"The premium had climbed to $14,200, up from $4,200 in 2020. One expense now consumes more than a third of the annual portfolio withdrawal."
#retirement-planning #homeowners-insurance #coastal-florida #inflation-and-cost-of-living #climate-risk
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