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This Is Why Climate Change Should Be Part Of Your Retirement Plan

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Older couple watching a storm rolling in

Hurricane season begins this month. Soon talking about the weather and the impact of climate change will not be about simply making conversation, but about planning and, for some, urgency and action at a life stage popularly described as a time to retire and relax. 

David and Rachel were years ahead of everyone else in planning their retirement. Not just saving and investing, but in knowing where they were going to live and what they were going to do when they got there. You might call them super planners. The kind of people that financial advisors must love, while the rest of us pure mortals, who don’t even know what time to pick up our kids at school, view them as somewhere between amazing and annoying. 

More than a decade ago, while retirement was a distant idea, David and Rachel bought a condominium in one of Florida’s beach towns. The layout, location, and views were the things retirement brochure dreams are made of. This was where they would retire. In the interim the condominium would produce rental income from tenants in search of killer views and fall out of bed access to the beach.

Looking away as if imagining herself there overlooking the ocean at sunrise, Rachel reminisces “We loved it there, we would visit regularly.” David, nodding his head in agreement, “yeah, everything fun was there, restaurants, shops…”

Then, years ago, they started to notice something that became increasingly commonplace. Sandbags stacked along the road holding back rising waters. David noted, “It wasn’t hurricane season, there wasn’t even a recent storm, and water on the road was there everyday.” He went on, “We couldn’t stay there, rumors and news reports suggested that climate change was only going to make the flooding worse over time — we were imagining not being able to get in, or out, of our condo depending on the water level.” Nervously Rachel chimed in saying, “What if there were to be a hurricane, how high would the water be then? What if we needed to get to the doctor?” Reluctantly, they sold their retirement dream home.

Rachel and David, like many people in retirement, are managing life in the cone of uncertainty. No, not financial uncertainty, but climate change uncertainty. The cone of uncertainty is often used to describe where hurricanes might land. We are all familiar with the television weather maps that show lines that form a cone of where a hurricane ‘might’ deliver its punch and do the most damage. Now climate change has introduced a new cone of uncertainty around where to live in older age. 

Graduate students in my Global Aging class and MIT AgeLab colleagues recently explored the question: Should climate change be a factor in retirement planning?

Consider this. According to NASA, evidence is emerging linking climate change to

extreme weather, such as hurricanes and storms most assuredly affecting favorite coastal retirement destinations. Although garnering less media coverage than hurricanes, rising waters are also affecting retirement destinations favored by urban downsizers on the waterfronts of the Carolinas, New England, and even as far north as my friends in Nova Scotia and Maritimes.

Western retirement destinations are not immune. Hotter weather in desert climates threaten the livability of year round golf resorts. Rising temperatures are also believed to contribute to conditions that increase the frequency and ferocity of wild fires that menace retirement dreams in western mountains and canyons. 

And, even those that are aging-in-place (jargon for staying in your current home through retirement) must think about how climate may affect their quality of life as well as costs in retirement. Previous extreme heat waves in Chicago, for example, cost many older people their life. For others, air conditioning, once used only for a few days a year, is now used for a few months and is now an unplanned retirement expense.

How might climate change be factored into retirement? 

Hard to believe, but there are age deniers out there. Yes, the science is in, we are all getting older. As we age we are likely to have more chronic health conditions, mobility challenges, live alone, and the need for things that were once niceties, e.g., air conditioning, are now health necessities.

Sadly, in major storms, and other weather events, the majority of people left behind, hospitalized, or killed are older adults. An estimated 70% of those who died in Hurricane Katrina were older people. Older people in Puerto Rico, particularly elderly men, were most likely to die in the aftermath of 2017’s Hurricane Maria. Likewise, of the 1,500 who died during the 2019 Paris heat wave, half were older adults.

Here are some starter questions to factor climate change into your retirement.

Where to retire? Retirement is like real estate. The quality of retirement is, in part, dependent upon three things, location, location, location. As much as it can be ‘knowable,” are you putting your older future self and loved ones with impaired mobility, fragile health, special nutrition needs, in the center of the cone of climate uncertainty?

Have you planned for what might become an annual, or even routine, expense of preparing your home for a coming storm or seasonal weather events? The costs may be more than simply the price of plywood and nail-guns for people in hurricane country. As we age we may need to identify and hire professional services to prepare our homes to respond to unpredictable weather events.

What about the price of repairs after flooding, wind, and fire damage? Will the rising cost of insurance be an expense to consider in retirement planning as the weather changes? In some areas, will the necessary insurance even be available in the future?

Similarly, will air conditioning become a major cost factor for some, while increasing moisture, mold, and mildew management costs be a consideration for others?

On a more existential level, does your retirement dream destination community offer adequate emergency transportation, health, food, and shelter for older people — not just services designed for younger, healthier, and more mobile evacuees?

Retirement planning is about more than financing dreams and goals in later life. It is about doing the best we can to plan and prepare for uncertainty. Many of us would never trade in a beach walk, a view over the mountains, the spectrum of color in a canyon, or even the comforts of the home we have lived in for decades, but preparing for possible conditions and costs of climate change should now be part of our retirement plan.

MORE FROM FORBESThe Best Places To Retire In 2021

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Real Estate

11 Predictions For Innovation In Commercial Real Estate

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Photos of featured members.

The impact of Covid-19 has greatly been felt across the commercial real estate industry. Many businesses had to shut down, while others moved to working remotely. Few new businesses opened due to the uncertainty the pandemic brought. During this time, there was little need for buying or renting commercial buildings. However, as agents know, the impact of crises on real estate does not last forever.

As the world begins to return to normal, workers are going back to the office and businesses are beginning to open. The demand for commercial real estate is growing, and with this growth come new possibilities for innovation. Below, 11 members of Forbes Real Estate Council predict how the commercial real estate landscape will react to the effects of the global pandemic.

1. Increasing Demand For Multifunctional Spaces

The pandemic accelerated trends already in play such as working from home. As companies allow employees to continue to work virtually in some capacity, developers will need to ensure interior spaces include aesthetic, yet highly functional pockets conducive for work. Advanced digital capabilities, privacy and adaptability for recreational use in non-working hours will define the new home office. – Mary Cook, Mary Cook

2. Heightening Need For Sustainable Buildings

The construction and operation of buildings account for nearly 40% of global carbon dioxide emissions, so innovative real estate leaders will invest in energy-saving designs and healthier materials. With governments at every level implementing stricter sustainability regulations, projects that don’t prioritize this will lose value as they become obsolete, uninsurable and unable to be occupied. – Andy Cohen, gensler.com


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3. Evolving Definitions For Real Estate

There will be a convergence of commercial and residential real estate (i.e., a modern take on timeshares), which will force us to get more specific about what commercial means. As we merge living, playing and working—along with how we own and invest—the marketplace will require iterative and inventive definitions that account for evolving ways of operating the future of living and the economic progress to which it adheres. – Alex Allison, D. Alexander

4. Prioritizing Proximity To Work And Home

More live, work and play communities are being developed. People are valuing their quality of life and time more. Proximity to work and play, especially in a walkable community, is more appealing as it minimizes travel time and expenses. – Catherine Kuo, Elite Homes | Christie’s International Real Estate

5. Converting Unused Office Spaces

With the significant decrease in demand for office space due to work-from-home and the digital economy in general coupled with the significant shortage in housing, I predict underutilized office space will be converted into condos. Kill two birds with one stone. – Nick Ron, House Buyers of America

6. Rising Real Estate Automation

AI will continue to reduce operating expenses at both the property level and the corporate level. The role of the commercial broker, appraiser and others will be reduced significantly over time. Almost everything will become automated like it did with banking, lending and other industries. – Ken McElroy, MC Companies

7. Increasing Need For Technology Solutions

Real estate is long overdue for innovation through legal tech. With the volume of business transactions in real estate, technology shall be built to centralize and automate case management, especially when it comes to foreclosures. AI can help predict foreclosure timelines based on previous cases, thus leading to more efficiency. – Saurabh Shah, InstaLend

8. Redesigning Housing Developments

Housing design (both single-family rentals and multifamily) as a result of Covid-19 and work-from-home optionality will be the greatest point of innovation in the real estate industry. Developers and owners who will use even a one-day-a-week work-from-home schedule will begin to think differently about the layout of their house. Time spent in the home will shift from the bedroom and dining rooms to an at-home office. – Paul Monsen, GSP

9. Combining Data With Relational Information

Access to real estate data, information and knowledge will continue to improve because of technology. The wisdom of combining the data, information and knowledge with the appropriate experience and relationships will always be controlled by real estate professionals. Real estate professionals should always focus on relationships above all. – Richard Lackey, City Commercial Real Estate, Inc.

10. Growing Number Of Commercial Real Estate Portals

We will start to see more portals that carry properties in much the same way as the MLS does for the residential sector. This is important for national clients and clients expanding across markets. There will be more cooperation in this space as we see the need to service both owners and prospects. – Nancy Kowalik, Nancy Kowalik Real Estate Group

11. Shifting Focus To Consumer-Centric Technology

The rise of consumer-centric technology will be a key trend for innovation as real estate owners look to provide better experiences in their spaces. Whether in multifamily or office, the end-user is a consumer with a set of expectations for the places they spend money and time. Innovations that help meet and exceed those technologies will help real estate owners stay ahead of the pack as CRE becomes more consumer-driven. – Benjamin Pleat, Cobu

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Real Estate

Using The Entrepreneurial Operating System To Navigate Through Uncertain Times

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Businesswoman presenting, co-workers clapping

Ali Jamal is the Owner and CEO of Stablegold Hospitality, a real estate investment company.

As the global pandemic completely rattles everything that we hold familiar, disheveling the way we work, live, learn, play, travel and even breathe, anyone responsible for the well-being of others is being forced to get their feet planted firmly on this shaky ground and figure out next steps, quickly. As the CEO of Stablegold Hospitality, a multimillion-dollar real estate investment firm, I’m in the same boat with thousands of business leaders who admit that showing leadership this past year, compared to any other year since the inception of their company, has given us a run for our money.

Years ago, my company implemented a business model called the Entrepreneurial Operating System, founded by Gino Wickman, which is broken down into six components: data, vision, people, issues, process and traction. Throughout the pandemic, however, as a leader I found the first three aspects to be fundamental in helping us navigate these turbulent waters. Throughout this year and next, I recommend that all leaders, duty-bound to the success of their company’s financial position and people, focus on adopting these three core aspects into their own leadership strategy. Here’s how and why. 

Data

While carrying out all the responsibility that comes with a leadership role, it becomes tempting to delegate the analysis of performance metrics to one of our direct reports. I call this deafening the data and am admittedly guilty of it from time to time. Ever since the pandemic showed the world its nasty strength, bringing the tourism industry to its knees, I had to ensure I didn’t make the same mistake.

One of the key tools I found useful to complete every quarter was a SWOT (strengths, weakness, opportunities, threats) analysis. That’s because, within weeks, the landscape that our hotels once operated in had completely turned upside down. Many customers lost their jobs and could not pay for their stay, and a flood of investors entered the Class C/D property market, now realizing the need for affordable housing was going to be greater than ever before. Doing this analysis on a regular basis forced me to face the current situation, follow its trends and stay a few steps ahead with a strategy to stay on top of the competition and understand what accommodations need to be made in the new climate.

In our case, for example, we put a stronger focus on acquisition, aggressively looking for appropriate real estate deals and closing on them as soon as possible. We also provided free or deeply discounted accommodation, for a limited time, to our loyal customers who truly hit rock bottom.

Vision

Trivia time! Apart from being some of the greatest visionary leaders of our time, what do Nelson Mandela, Ray Dalio and Elon Musk all have in common? When faced with imminent threats, they didn’t simply drop their heads in their hands. They were guided by an unshakeable vision for a brighter future and had an uncanny ability to influence others into putting their fears aside and adopting that vision. 

History reveals that economic downturns are inevitable. More importantly, it also teaches us they don’t last forever. Now is the time to get those visionary goggles on and garner at least a fraction of the confidence, trust and respect that great visionary leaders have achieved.

Every week, I spend approximately 15% of my time analyzing our data, especially our SWOT analysis, strategizing how we’re going to overcome any downward trends or threats, and then executing those thoughts by creating tasks that are delegated to my management team. Another 10% of my time is spent on communication, a check-in if necessary, to rally my team around that vision.

People

Unemployment rates sky-rocketed due to Covid-19, which, although unfortunate, brings a silver lining to business leaders who need to build an army that will help drive the company’s mission to its post-crisis future.

The people component of the EOS model refers to hiring the right talent and designating them to the right seats. Our current market is flooded with candidates who have relevant skills and experience. What makes them the “right” people, however, is whether they genuinely buy in to your vision and the company’s sense of purpose. In times like these, we need staff who are strong-minded and determined to fulfill the company’s mission. Their willingness to do so can be determined in a number of ways: research their extra-curricular activities and interests, evaluate their response to behavioral questions such as “How did you resolve a particular problem at your last job?” and assess their aptitude for change management. 

Thanks to a larger supply of candidates, we should also find it easier to target the right industry for recruitment. Lately, for example, I’ve found it much easier to find individuals who previously worked in the tourism industry, have experience working in the same property class and who are also a cultural fit for the organization. I rarely ever found all three traits in one candidate before.

I’ve also learned that when these candidates do exist, they’ll get snatched up in a New York minute. It’s so important to pay special attention to the people aspect of the EOS model while there’s great talent out there, just waiting to be hired.

To clarify, I’m not stating that the other three components of the EOS model — issues, process and traction — should be ignored. They’ve helped me organize and add structure to my company by leaps and bounds. I’ve found that the three aspects discussed above, however, are critical to execute during times like these. If your business has survived the pandemic thus far, you’ve probably already started putting them into practice. I believe prioritizing them and intentionally practicing them in your day-to-day operations, however, will propel your business to succeed far beyond what your competitors are hoping for.


Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?


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Real Estate

How To Launch An Entrepreneurial And Investing Career When You’re Young

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Saving for properties

Canadian Entrepreneur with Global Invest, on a mission to help people invest in real estate to create generational wealth.

The best time to start entrepreneurship and investment is when you are still young because the longer your financial investments will be operating, the more substantially your savings account will grow. I receive many queries from young people who want to set up an entrepreneurial project and invest in real estate. I strongly encourage them to do so. Despite your young age, you can learn how to save and invest your money to yield additional income. Here’s how.

Save Money

You might be wondering right now how to save money without a salary or with minimal income. It is possible! Here are two smart ways to build up a savings account and generate returns. 

1. Tap into your own pocket money: If you are still a student or under the care of your parents, you may receive a monthly allowance from your parents or student financial aid. If this is the case, I advise you to start saving based on your available cash, at least $100 per month, in an individual savings account. The IRA is suitable for you at this point as it is tax-free.

2. Look for a student job: To save sufficiently for your investment project, search for a part-time job that will provide additional income you can direct toward savings. You will want to build up considerable savings as a first step in order to achieve a return on your future investment.

Build Your Business Online

In order to start a business and invest at a young age, you must recognize that the internet has created a global village where everything can happen with just a click. Indeed, the web is full of opportunities that should not be neglected. 

1. Build your own website: As a student or young professional, building up a substantial savings account can be quite difficult. One strategy I recommend is creating a website where you can offer your services. The internet is a massive customer niche where possibilities abound, from e-commerce to offering consulting services to writing sponsored blog content and more.

2. Brand yourself on social networks: Social networks have significantly reshaped the business world. It is difficult to succeed without creating a recognizable brand across social networks, especially if you want to start a business and investing career at a young age. In this respect, I advise creating Facebook accounts, Twitter accounts and even a YouTube channel. These accounts can significantly help you boost your eventual rate of return.

Invest In Real Estate

Once you have saved enough money through your business and savings plans, make your money work for you. Investing in rental property is one of the best ways to diversify your monthly income.

1. Invest with REITs: A real estate investment trust, or REIT, is a great stepping stone to entrepreneurship and investment for young people. Also sometimes referred to as real estate paper, this type of investment offers excellent possibilities in terms of rental management, especially if you are a student and school takes up most of your time. The REIT you invest with will handle all the leasing, renovation work, rent deductions, etc., and interest rates generally vary between 5% and 9% depending on the type of REIT chosen. 

2. Explore real estate crowdfunding: Crowdfunding is another interesting approach for young people who lack the required funds to obtain a mortgage and represents a supportive financing method for real estate projects. It plays the same role as a banking institution as it provides money to start your real estate project. The annual rate of return on this type of funding ranges from 8% to 10% depending on the size of the investment.

3. Purchase a parking space: It is wise to start out small and work your way up. For example, you can start by buying a simple property such as a parking space, something that may be much more attainable for young entrepreneurs. By starting on a small scale and planning for the short term, you can minimize your risk.

Improve Your Skills Through Training 

In order to achieve long-term investing success, you need to be an expert in your field. For example, if you intend to invest in rental property, I recommend taking a property investment course in order to build a good investor profile. You need to know how to invest in order to make the most profitable investments. Constant training provides a number of advantages, including:

• Staying competitive.

• Increasing your profitability.

• Acquiring new knowledge.

• Keeping up to date on industry trends.

• Increasing your credibility and building customer loyalty.

As I like to say: In rental investing, what you don’t know can cost you a lot in terms of money, opportunities and strategy. So, it’s important to keep training. Indeed, investing in real estate at a young age and improving your skills over time is an excellent strategy for those who aim to become rich faster, take an early retirement and live on generous retirement savings generated by your real estate investments. 

The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.


Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?


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