The Insurance Bill That Could Push Retirees to Rethink Where They Live

Paying off your mortgage isn’t necessarily a ticket to an easy retirement anymore.

It can certainly help, but monthly housing bills can still rise despite a fully paid off mortgage. Home insurance is one of those bills, and premiums have been skyrocketing in some areas, especially in states that are exposed to hurricanes, wildfires or severe storms.

Why home insurance is becoming a retirement problem

For some people, homeowners insurance is reshaping how people plan for retirement. It’s no longer a predictable line item due to expensive disasters and higher rebuilding costs. Some insurers have even pulled back on coverage in riskier areas, leaving homeowners with fewer options. Less competition sets the stage for higher insurance premiums as some homeowners end up paying thousands of dollars per year. Premiums are expected to surpass $3,000 this year, according to projections from Insurify.

Homeowners insurance isn’t the only expense in a retiree’s budget, and as more costs go up, it can become difficult to budget for it along with all your other retirement expenses.

Higher premiums can force hard choices

Higher homeowners insurance premiums can squeeze your budget and force you to reduce spending in other areas. It may mean cutting costs on discretionary items, delaying home repairs, dropping optional coverage or considering a move. However, it can be even riskier not to have insurance for your home since it’s the most expensive possession you have.

Insurance can also undermine the original math you used to determine that you can retire comfortably. You can opt for higher deductibles on homeowners insurance to save money, but that decision can sting in the future if you need to make a claim and are facing off against a high deductible. It’s important to do your research and carefully consider all your options.

What retirees should calculate

You can save on your home insurance, but there are other strategies you can use to trim costs and determine if staying or moving is the right call. Start by calculating your total housing costs, including property taxes, maintenance, insurance, utilities and homeowners association (HOA) fees.

Once you know that number, you can review your income sources and assess if you have enough money coming in to cover your monthly costs. Downsizing or renting can free up more capital and can close the gap between your income and expenses.

If you decide to stay put, you can save money by comparing insurance policies and receiving multiple quotes. Bundling policies and getting annual plans can free up space in your budget. A rising insurance bill doesn’t mean you automatically have to move, but it does mean factoring in insurance premiums when crafting your retirement budget.