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Do you want waterfront?

By Jennie L. Phipps ·
Sunday, December 30, 2012
Posted: 6 am ET

If your retirement planning includes buying ocean or riverfront property, in the wake of Superstorm Sandy you might want to reconsider. It may not be such a great idea.

John K. McIlwain, senior resident fellow at the think tank Urban Land Institute, says buying oceanfront property is a "very tricky" issue now. "Whether you believe in climate change or not, the weather is changing whatever the cause. Sea levels are rising and that rate of rise is far exceeding the rate of rise being predicted several years ago."

He thinks homeowners who live near the ocean or rivers should count on flooding, tougher building codes and rising insurance costs, including the probable demise of federal flood insurance. The federal program collects about $3.5 billion in annual flood insurance premiums, but in four of the last eight years, the payout has been more than that, reaching $15 billion in the year of hurricanes Katrina and Wilma.

The impact will include much higher insurance costs and greater difficulty selling waterfront property, McIlwain predicts. "Many waterfront homes aren't going to hold their value," he says. "Buy the property if it is a place you absolutely love and will live in for the rest of your life. But if you think you'll want to sell it to pay for a senior community, forget it. Buy something else."

McIlwain doesn't believe lakefront property is going to have the same issues, so if you believe McIlwain's dire predictions are right, but you really want to spend your retirement on the water, lakes might be worth considering. Or you could rent or live on a boat or park your RV oceanside. It's all about the view, and even occasional high water can't take that away.

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