Climate Change Puts A Generation’s Retirement On The Line
Early retirement withdrawals for hardship have tripled since 2020, as disasters strike and insurance fails–leaving workers on their own in old age.
Adam Mahoney
Standing in front of Pasadena’s city council in June, Totress Beasley begged for support.
After being displaced twice — after previous landlords sold the rental properties she called home — she explained how she thought she should put her life in her own hands and buy her own house.
For five years, through the Great Recession, the Pasadena, Calif., native slept on a relative’s couch in an attempt to save as much money as possible while working as an office assistant for the city. By 2012, she had pinched together enough to afford a down payment on a $235,000 three-bedroom house in her hometown. A sprawling fig tree stretched across the front yard, an abundant orange tree offered endless bounty in the backyard, and her regular visitor, an owl, hooted every night.
“I’ve done this all by myself, all of my life,” she told the elected officials. “I’m a saver.”
So she saved even when life felt more stable. And on January 7, she made her final mortgage payment. Over 13 years, the home’s market value had skyrocketed to nearly $1 million. It became an asset she hoped would make the lives of her adult-aged children easier, so they wouldn’t have to do it all on their own, too.
On January 8 — along with 9,000 properties across Pasadena and neighboring Altadena — Beasley’s house burned down.
She had imagined slowing down, trading 6:30 a.m. wakeups for the freedom to try new experiences and simply enjoy life. But saving can only cover so much — and roughly two-thirds of Americans now expect to face a damaging natural disaster in their lifetime. As fires, storms and floods become more intense, the path to a steady retirement now runs through disaster zones.
“I’ve been working since I was 16 and my goal was to pay off the house and retire,” the 65-year-old says. “I’m not sure what my retirement will be now.”
More than half of Americans say they feel anxious that extreme weather will drive up costs, cause financial losses or harm their health in retirement. And for a country where the share of its over-50 population is approaching 40% — up from around 25% in 2000 — the crisis is reaching an apex.
For those on the cusp of retirement, even modest setbacks can push the retirement date out of reach, especially if insurance is unaffordable or inadequate and the public safety nets fall short, explains Danielle Arigoni, author of Climate Resilience for an Aging Nation.
Like more than half of Americans, Beasley doesn’t have enough savings to cover the gaps left by paltry federal aid and insurance payoffs. Nationally, more than half of households impacted by disasters are denied federal assistance or don’t have insurance. In California, many of those facing fire damage have had their insurance claims denied.
The odds against Black and low-income families are statistically stacked even higher. In Altadena, a series of public and private failures left Black households most likely to face the complete loss of a home—a racial line seen nationwide, regardless of the type of disaster, due to discriminatory housing policies that have left people of color in disaster zones. At the same time, Black households are less likely to receive federal support and less likely to have savings.
For those who do have retirement savings, Black men and women are up to four times more likely to have to dip into those funds before retirement — sometimes during a disaster — and the situation is only becoming more common. Early hardship withdrawals from 401(k)s are at a record high and the national safety net is growing thinner under the Trump administration.
“It’s a pretty scary proposition when people are dipping into their retirement funds to help recover from disasters,” Arigoni says, because depleting savings today does not prevent another disaster hitting tomorrow. “That’s an option of last resort, [taken] because federal resources or local or philanthropic resources are not up to the task.”
For Beasley, that meant the nest egg she carefully built could vanish overnight, leaving her back at square one.
“I am a senior citizen,” Beasley said in June. “I am tired.”
With personal savings depleted and public support limited, many older Americans are delaying retirement or returning to work well into their 70s, facing housing insecurity or homelessness. People aged 50 or older are the fastest-growing group of people experiencing homelessness, and the steady erosion of retirement security as a result of climate change is forcing a generation — once sold the idea of homeownership as the basis of stability — to navigate an increasingly precarious old age.
Paradoxically, even as nature delivers new blows, a troubling share of America’s retirement wealth remains locked in the same climate-exposed assets that are driving the instability. In the United States, roughly $863 billion (of the $43.4 trillion in private retirement funds) is invested in the fossil fuel companies most commonly associated with the greenhouse gas emissions exacerbating the climate crisis. What’s more, a whopping 30% of all shares invested in fossil fuel companies come from pensions, most of which are public.
In the words of Taproot Earth, a Black-led climate organization in the Gulf South, we’re facing a moral crisis. “There is no sane or moral reason for pension funds, 401(k) portfolios or other investment vehicles to have default investments in oil, gas, plastics, prison systems and military weapons,” says Mary Annaïse Heglar, on behalf of the group. “Sure, there is a ‘return on investment,’ but it’s just a return on making things that will ultimately kill us — Black people, specifically.”
Beyond the struggles of long-term instability, for homeowners like Michelle and Alicia Benn, natural disasters have come to define their day-to-day life.
On a recent afternoon, I spoke with the Benns from their car, driving between errands across Los Angeles County, which has been their routine for eight months. Unlike many of their Altadena neighbors, their house still stands — but it’s unlivable, because of smoke and wind damage. Repairs are dragging out far beyond the timeline their backed-up contractors promised.
Simultaneously, their small embroidery shop — just blocks away — has closed. It too has smoke damage, but the reason for the closure is primarily because their customer base was displaced.
For stability, the couple initially stayed with their adult daughter, crammed into a one-bedroom. Climate disasters are increasingly prompting extended families to crowd into single homes, even as disrupted routines, privacy loss and space issues increase household tension. The living arrangements sometimes see families adapt and share caregiving roles, but they can also strain relationships and exacerbate inequalities, especially when family members lack stable jobs or health insurance.
By February, the Federal Emergency Management Agency and the Benns’ insurance company stepped up to provide reimbursement for a hotel. But the double blow of losing both home and livelihood left the Benns with neither a roof to return to nor a steady income to fall back on.
“Some people are living in a hotel or apartment, but they’re still able to go to work and take care of their families,” Michelle Benn says. “We can’t do that.”
Their business insurance claim for lost wages is still unresolved, despite months of submitting tax documents, invoices and profit-and-loss statements.
Like many Americans, Michelle Benn says he has been dreaming about retirement since he first started working, as a teenager. Now, the 61-year-old and his 56-year-old wife have no idea when — or if — retirement will arrive.
To keep their home out of foreclosure, the Benns emptied their retirement accounts, including a 401(k). Previously, they had already pulled from their savings to put their children through college.
“We had to deplete all of it,” Michelle Benn says, because “when you’re about to lose your home,” you can’t just decide, “well, we have to keep our retirement fund.”
Some measures have been advanced, like the Secure 2.0 Act, which President Joe Biden signed in December 2022, building on a similar 2019 bill in an attempt to improve retirement readiness. Secure 2.0 eliminates the 10% early withdrawal penalty on retirement accounts for people facing a federally declared disaster, up to $22,000. But as climate‑driven catastrophes grow costlier and inflation squeezes family budgets, the policy on paper and what families actually receive can be different things.
Even after emptying their 401(k) to save their home from foreclosure, the Benns never saw relief from the penalty‑free withdrawal option. They were unaware the provision existed, and their account administrator did not apply it.
This year, the federal government was supposed to release a report on the effectiveness of some of the provisions of Secure 2.0, but an assistant director at the Government Accountability Office said, “At this point, the report will likely not be issued until Spring [2026].”
Since 2020, the rate of people withdrawing from their retirement funds for hardships like natural disasters has tripled. May 2025 saw the highest reported early withdrawals ever. The result of these early withdrawals is that a whole generation is “robbing themselves of their future,” as one adviser told Business Insider in July.
“We have these two trends that are on a collision course,” Arigoni explains. “We have more frequent and more intense climate events, and we have a rapidly aging population that is already unduly impacted by climate disasters without the tools.” In other words, the assets meant to sustain people in old age are being destabilized through climate-exposed property values or surging insurance costs, explains Manann Donoghoe, a climate finance and resilience researcher at the Brookings Institute.
For Black and brown families, the stakes are even higher. About half of the wealth of Americans over 60 is tied up in home ownership — meaning if they lose their house in a disaster, they’ve lost half of what they own. In Altadena, Black homeownership reached 74% — more than 1.5 times the national average for Black Americans — and about 60% of Black homeowners were people over 65, close to double the rate of non-Black homeowners.
“Climate change risks could complicate or even erase that little inheritance,” Donoghoe explains.
For the Benns, the rising value of their home — up from $150,000 when they purchased it, in 1996, to almost a million dollars today — is little comfort. They don’t have the savings to match nor a business to return to. If the couple were to sell their home — which they say they would never do, even if “another fire happened tonight” — the equity they’ve built would not pay for a new house in California.
“The house becomes our retirement, pretty much,” Benn says, “whether that’s being able to get another loan in the future or use the equity in some way. Trying to put money in a bank account these days is not going to do anything.”
As climate change increasingly becomes a threat not just to homes, but to the very foundations of retirement, even the most careful savers, like Beasley, are finding personal effort can’t outpace the risks woven deeply into the financial system.
Not only might someone have to drain their retirement and savings to sustain themselves after a climate event, but their retirement investments might also be making the events themselves more frequent. Millions of Americans have hundreds of billions of dollars tied up in retirement funds locked into fossil fuel companies, whose fortunes are increasingly at odds with both a livable climate and financial stability.
The money Americans are banking on to live in old age are fueling the industries making it harder to breathe, increasing cancer risks and making communities more ripe for disaster, explains Jessye Waxman, a campaign adviser for the Sierra Club’s Sustainable Finance campaign. “If climate change is set to negatively impact global economic performance — and just the world’s generational health — this isn’t something you can diversify away from,” Waxman says. Even well-diversified investments can’t offer protection if the entire market is exposed to climate-driven instability.
Without urgent climate policy interventions, North American pension returns could fall by as much as 50% by 2040, researchers from the risk management firm Ortec Finance warn. The destruction of pipelines, refineries and transport networks by floods and fires could render fossil fuels impossible to produce or deliver at scale, effectively accelerating the industry’s obsolescence even before clean energy fully replaces it. In sum, according to Waxman, the costs of climate disasters are going to make retirement even more expensive.
Black workers face an even steeper climb. The median retirement account value for Black families was $39,000 in 2022, compared with $100,000 for white families, according to the Federal Reserve Survey of Consumer Finances. This gap is the legacy of longstanding racial disparities in opportunity, such as fewer opportunities for Black workers to participate in employer-sponsored retirement plans.
In theory, public sector jobs — often a route to stability for people of color — could help close this racial wealth gap, as all pensioners receive the same guaranteed benefit. But there’s still a climate problem there, too. Even as hundreds of institutional investors, controlling $40 trillion in assets, have implemented partial or complete fossil fuel exclusions, many U.S. pension funds have not — and they defend their fossil fuel holdings with a familiar refrain, that staying invested gives investors a seat at the table to encourage change.
Executives at funds like California’s two largest pension funds, CalPERS and CalSTRS, have argued that, if they stopped investing in oil and gas, they’d be replaced “with new investors, ones who are unlikely to speak up as loudly or as consistently as we have about the urgent need to move toward a low-carbon economy.”
Yet the idea that staying invested gives pensions a meaningful voice overlooks a deeper dysfunction: The funds themselves are often disasters. Over the past few decades, many pensions have shifted away from stable, low-cost investments in favor of high-fee, high-risk vehicles, including private equity and hedge funds. Fossil fuel projects often fall into this same category, advertised as high-return opportunities. In states like Illinois, Kentucky and New Jersey, pension funds have become fiscal cautionary tales as a result of being underfunded and loaded with high-fee, underperforming assets, including billions in fossil fuel investments. But somewhere between board meetings and mounting climate losses, the numbers are clear. Fourteen major U.S. public pension funds collectively invest more than $80 billion in oil, gas and coal, and these investments have consistently underperformed the wider market over the past decade. If major U.S. pension funds had divested from fossil fuels a decade ago, they would be worth an estimated $17 billion to $21 billion more today. Studies show divesting not only protects against climate risk but has consistently delivered higher returns for at least a decade, as sectors like technology, healthcare and renewable energy have outpaced fossil fuels in growth and stability.
“We are in an era where we are seeing a lot of systemic risk, climate change, ecosystem destruction, biodiversity loss, like really growing economic inequality, all of which destabilizes the system in a way that’s very different from [the past],” Waxman says. “Financial institutions need to adapt to the changing reality, and that means taking more steps, doing things differently in terms of their approach to risk management.”
And the costs of climate disasters are going to make retirement even more expensive, according to Annaïse Heglar. “Our elders should be focused on passing down their true wealth — generational wisdom — not scrambling to compete in a capitalistic society. We believe that these institutions should start with the root of the problem, which would mean taking seriously the debts owed as a result of extractive and exploitative economies. Taken through that lens, the only logical solution is investment in communities through climate reparations.”
For workers like Beasley and the Benns, the gap between the promise of the system and the reality on the ground is only getting wider.
“I remember when you could retire and get your retirement at 55 years old,” Michelle Benn says. After the fires, he’s expecting to work into his 70s. “The whole retirement thing now sounds like kind of a crazy idea.”
Adam Mahoney is the climate and environment reporter at Capital B who has reported from more than a dozen U.S. states, Palestine, Mexico, Uganda and Vietnam.
