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The baby boomer generation is “slipping through the cracks” of the U.S. retirement system due to the rising prices of home insurance across the country, according to an analysis from online insurance marketplace Insurify.
“A new source of financial strain on retiree budgets is homeowners insurance premiums, which have skyrocketed by 20% between 2021 and 2023,” the report stated, citing data compiled by the company.
An estimated 30.4 million Americans will turn 65 between 2024 and 2030, and more than two-thirds of them are expected to be “financially challenged” in later life, according to the Alliance for Lifetime Income, a nonprofit group dedicated to education about annuity products.
While inflation has moderated recently, years of absorbing higher costs have thrown off the budgets of some retirees and have led to a scaling back of spending in retirement. The rising price of home insurance premiums on top of other costs like car insurance premiums, groceries and hospital care, have only served to further destabilize the retirement budgets of many older Americans.
“These increases are especially difficult for the one-third of senior citizens who reported not having enough money to live comfortably in retirement in a 2023 Gallup survey,” the report said. “Insurify’s data science team analyzed the rising costs of essentials, including home insurance in every state, to find out how inflation is affecting retirees in 2024.”
The U.S. Census Bureau’s most recent American Community Survey found that the average annual income for a retiree in 2024 is $31,390. In most states, retirees are spending between 6% and 10% of their income on home insurance costs, but eight states in the southeastern U.S. require as much as 11% to 20% of income to be allocated for such costs. Residents in three states — Oklahoma, Louisiana and Florida — are spending 21% to 34% of their income on home insurance premiums.
“Coastal states are popular retirement destinations, but they often have serious climate risks that drive up home insurance premiums,” the report explained. “Hurricane-prone Florida’s $11,163 average annual home insurance cost equals 34% of the average retirement income for the state. Louisiana retirees face the second-highest home insurance costs in the U.S., at $6,560 annually, representing 24% of their average retirement income.”
Moving inland to states with less inherent climate risk could be seen as a solution, but the report suggests that this strategy might not be helpful. States including Idaho and Michigan fall closer to the national average, with retirees spending roughly 7% to 8% of their income on home insurance premiums, but these states have also seen premium increases of 18% and 12%, respectively, during the first six months of this year.
These heightened costs make living exclusively off Social Security benefits more difficult. Federal Reserve data indicates that 21% of retirees utilize Social Security benefits as their only source of income. The 2025 cost-of-living adjustment (COLA) for the program is expected to be lower this year than in prior post-pandemic years.
