Investing

Warren Buffett’s biggest advantage in investing is time.
Had he retired at 65, he may have never become a household name.
Here’s what individual investors can learn from his approach.

Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles as he plays bridge following the annual Berkshire Hathaway shareholders meeting in Omaha, Nebraska, on May 5, 2019.
Nati Harnik | AP

Warren Buffett is widely praised for his investment acumen.
But one of the biggest factors to his success has nothing to do with picking the right companies.

“His skill is investing, but his secret is time,” Morgan Housel wrote in the bestselling business book, “The Psychology of Money.”
“That’s how compounding works,” Housel wrote.
To that point, 99% of Buffett’s net worth was accumulated after he was 65 years old, Housel said during a 2022 interview with CNBC.
“If Buffett retired at age 65, you would have never heard of him,” Housel said.
Today, Buffett’s total net worth is estimated at $132 billion.

That’s up substantially from the $84.5 billion net worth Buffett had at the time Housel’s book was published in 2020. Most of that wealth came in Buffett’s later years, Housel wrote, with $84.2 billion after he turned 50 and $81.5 billion after he turned 65.
Compound interest accumulates not only the on the initial amount invested, but also to the interest in previous periods.
Buffett has compared it to a snowball rolling down a hill. By the time it gets to the bottom, it is much larger.
“The trick is to have a very long hill, which means starting very young or living … to be very old,” Buffett said.

How to use compound interest to your advantage

Everyday investors can easily put the power of compound interest to work.
“Start early — as young as you can — and even if it’s just small amounts, just keep doing it,” said David Rea, president of Salem Investment Counselors in Winston-Salem, North Carolina.
Buffett himself got an early start, making his first stock purchase at age 11. But after selling the three shares of Cities Service, he saw the stock surge, which served as an early lesson that it’s hard to predict when to buy a stock and when to sell it.
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People tend to get excited when the market is going up, which prompts them to buy, noted Bradley Klontz, a certified financial planner and behavioral finance expert with Your Mental Wealth Advisors.
Then when markets drop, they tend to get scared and sell, which is the opposite of what they should be doing, said Klontz, who is also a member of the CNBC FA Council.
The S&P 500 has returned more than 10% per year on average over the past 100 years, Klontz noted. Yet investors who try to time the market won’t reap the full benefit of those gains if they’re moving in and out of their investments.
Individuals are not necessarily to blame; survival instincts will prompt you to follow the crowd.
“We’re wired to do it,” Klontz said.

Becoming a millionaire is ‘easy’ if you start early

We’re also wired to consume today rather than prioritize future gratification. To combat that, it helps to have a specific vision for why you’re investing — the freedom you hope to achieve, the car you want to drive and the emotional satisfaction that life will bring you, Klontz said.
When you clearly have that goal in mind, take action and set up automated movements of your money, say from your paycheck to your 401(k) plan, he recommended.
Like Buffett, individuals will also reap the most rewards if they start young.
“It’s actually pretty easy to become a millionaire if you’re starting early,” Klontz said.

But the longer you wait, the harder it is to catch up. For example, the $5 a day you would need to accumulate $1 million when you’re just starting out may turn into $500 a month at age 30, he said.
The good news is that an investment strategy does not need to be complicated. Buffett himself has recommended individuals keep it simple with a low-cost S&P 500 index fund.
“If you buy an S&P 500, index fund, week in and week out, you will compound to a large amount of money,” Rea said.
Investors can also take other cues from Buffett — don’t panic; buy American; and keep investing through good and bad, Rea said.

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The U.S. Department of Education recently said that it will soon transfer some student loan borrowers to different servicers.
Here’s what you need to know.

The US Department of Education sign hangs over the entrance to the federal building housing the agency’s headquarters on February 9, 2024, in Washington, DC. 
J. David Ake | Getty Images

If your current federal student loan servicer is Mohela, or the Missouri Higher Education Loan Authority, the U.S. Department of Education said it will soon transfer some student loan borrowers to different servicers.
Here’s what you should know about the change.

Change impacts Mohela borrowers

The Education Department began transferring a portion of Mohela’s borrowers this week to different companies, it said in an April 29 blog post.
More than 1 million borrowers may be impacted.
“A different servicer will begin managing these loans and assisting these borrowers,” the department said.
The Education Department contracts with different companies to service its federal student loans, including Mohela, Nelnet and EdFinancial. It pays the servicers more than $1 billion a year to do so, according to higher education expert Mark Kantrowitz.

Why the transfer is happening

Mohela requested the transfers, the Education Department said, but the company has also been a magnet for controversy of late.

At the end of October 2023, the government accused the servicer of failing to send timely billing statements to 2.5 million borrowers when the Covid-era pause on payments expired, resulting in more than 800,000 borrowers becoming delinquent.
The Education Department withheld $7.2 million in payment to Mohela for its error.
“The disruption to Mohela’s servicing last fall may have been caused by capacity issues,” Kantrowitz said.
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In February, the Student Borrower Protection Center and the American Federation of Teachers published a joint report titled, “The Mohela Papers,” finding that four in 10 student loan borrowers in repayment serviced by Mohela “experienced a servicing failure since loan payments resumed in September 2023.”
On April 10, the U.S. Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Economic Policy held a hearing about Mohela’s performance as a student loan servicer.
“Today, Mohela surrendered more than 10 percent of its total loan servicing business, showing that its executives now recognize what borrowers have long understood: Mohela’s position as a leader in the student loan industry was a mistake,” Mike Pierce, the executive director of the Student Borrower Protection Center, said in a statement.
Officials at Mohela did not immediately respond to a request for comment.
Pierce added that he hopes Education Secretary Miguel Cardona “builds on this progress and continues to protect borrowers by stripping the scandal-plagued firm of its remaining business.”
After the transfers, Mohela will still service the federal student loans of at least 6 million borrowers, Kantrowitz estimates.

What borrowers should do amid transition

Borrowers who are being transferred to a different servicer should receive alerts from Mohela and their new servicer, the Education Department explained.
They will then need to establish an online account with their new servicer.

If you were enrolled in automatic payments with your servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.
If a borrower has a problem with their servicer, they can submit a complaint to the Department of Education’s Federal Student Aid unit.

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The IRS has released an update on its strategic operating plan, which outlines “major accomplishments” since its infusion of funding less than two years ago.
The agency aims to more than double the audit rate for the wealthiest taxpayers with total positive income of more than $10 million by tax year 2026.
It also plans to nearly triple audit rates on large corporations with assets over $250 million and boost audit rates by tenfold for large, complex partnerships with assets over $10 million.

Internal Revenue Commissioner Danny Werfel speaks during his swearing in ceremony at the IRS in Washington, D.C., on April 4, 2023.
Bonnie Cash | Getty Images News | Getty Images

The IRS has released an update on its strategic operating plan, which outlines “major accomplishments” in taxpayer service, technology and enforcement since its infusion of funding less than two years ago.
Emphasizing key focus areas, the agency on Thursday highlighted the need for sustained funding, including a $104 billion proposal to extend Inflation Reduction Act funding through fiscal 2034.

The agency also renewed its focus on “tax fairness” with plans to increase audits on the wealthiest taxpayers, large corporations and complex partnerships.
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“This update also reflects our ongoing effort to make sure we focus compliance resources where they need to be,” IRS Commissioner Danny Werfel told reporters on a press call.
The IRS aims to more than double the audit rate for the wealthiest taxpayers with total positive income of more than $10 million by tax year 2026. This would bring the audit rate for these individuals to 16.5% in 2026, compared to 11% in 2019.
The agency also plans to “nearly triple audit rates” on large corporations with assets over $250 million and boost audit rates “by tenfold” for large, complex partnerships with assets over $10 million, Werfel said.

“At the same time, the IRS continues to emphasize the agency will not increase audit rates for small businesses and taxpayers making under $400,000,” he said. “And those remain at historically low levels.”
In fiscal 2023, the IRS closed nearly 583,000 tax return audits, resulting in $31.9 billion in recommended additional tax, according to the latest Databook.
For all returns filed between 2013 and 2021, the IRS examined 0.44% of individual returns and 0.74% of corporate returns as of the end of fiscal 2023.

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The Federal Reserve indicated it is unlikely to lower interest rates just yet, which means anyone who carries a balance on their credit card won’t get a break on sky-high interest charges.
Rather than wait for a rate cut, consumers should take matters into their own hands, experts say.
Here are the best ways to lower your credit card’s annual percentage rate.

The Federal Reserve held rates steady Wednesday — again deciding not to cut — which means anyone who carries a balance on their credit card isn’t getting a break from sky-high interest charges.
“It is becoming clearer and clearer that the Fed isn’t going to lower interest rates anytime soon,” said Matt Schulz, chief credit analyst at LendingTree. “If Americans want lower interest rates, they’re going to have to do it themselves.”

The good news is there are options out there, especially if you have solid credit, he added.

What determines your credit card rate

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the recent rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to almost 21% today — near an all-time high, according to Bankrate.

“As long as interest rates remain relatively high, it’s important that consumers continue to use credit smartly, especially when it comes to higher interest products such as credit cards,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion.
“It’s best to only use these cards to the extent there is confidence they can be paid off relatively soon, as interest can pile on quickly, particularly at the higher rates of today,” she added.

How to lower your credit card APR

Annual percentage rates will start to come down once the Fed cuts rates, but even then they will only ease off extremely high levels. With only one or two potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Schulz.

“Those anticipating a dip in new credit card APRs in the near future should probably adjust their expectations,” Schulz said.
Rather than wait for a modest adjustment in the months ahead, borrowers could call their card issuer and ask for a lower rate, switch to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a personal loan, Schulz advised.
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Cards offering 15, 18 and even 21 months with no interest on transferred balances are still out there, according to Ted Rossman, senior industry analyst at Bankrate.
“The fact that zero-percent balance transfer cards remain widely available, is, on its face, surprising,” said Rossman, particularly given the amount of inflation and the number of interest rate hikes the credit card market has weathered since the pandemic.
And U.S. consumers are carrying more credit card debt.
Total credit card balances have been above $1 trillion since August 2023 and are currently hovering just near or above $1.05 trillion since this past February. But that hasn’t deterred credit card issuers from offering generous terms on balance transfer cards, Rossman said.

“It’s actually a very profitable time for credit card issuers because rates are up and more people are carrying more debt for longer periods of time,” Rossman said. “But most of those people are paying that debt back. If we were to see the job market worsen or delinquencies to go up even more, that’s when I think issuers get nervous. But right now, it’s kind of a Goldilocks environment for credit card issuers.”
It’s also an ideal time for consumers to take advantage of all the options credit card issuers are offering.
“Balance transfer cards are still your best weapon in the battle against credit card debt,” Schulz said.
A balance transfer credit card moves your outstanding debt from one or more credit cards onto a new card, typically with a lower interest rate.

Alternatively, “consumers should consider exploring lower interest products to help consolidate their higher interest debt and lower their monthly payments,” Raneri said.
Currently, the interest rate on a personal loan is closer to 12%, on average, according to Bankrate.
“If you don’t have good enough credit to get a zero-percent balance transfer card, a personal loan can be a good alternative,” Schulz also said.
And consolidating comes with the added benefit of letting you simplify outstanding debts while lowering your monthly payment.

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Regulators and Exxon reached an agreement that will bar Pioneer’s former CEO Scott Sheffield from joining the Exxon board.
Exxon first announced the deal for Pioneer in October, in an all-stock transaction valued at $59.5 billion.
Exxon said the acquisition would more than double its production in the Permian Basin.

A view of the Exxon Mobil refinery in Baytown, Texas.
Jessica Rinaldi | Reuters

The Federal Trade Commission will wave through Exxon Mobil’s roughly $60 billion acquisition of Pioneer Natural Resources after reaching an agreement with the energy giant, a source familiar with the matter told CNBC.
The FTC will not block the deal now that the regulator and Exxon have reached a consent agreement, the source said. The agreement will bar Pioneer’s former CEO Scott Sheffield from joining the Exxon board.

The push to remove Sheffield was due to concerns about his prior discussions with OPEC, according to the source.
Exxon and the FTC both declined to comment. The agreement was first reported by Bloomberg News.
Exxon first announced the deal for Pioneer in October, in an all-stock transaction valued at $59.5 billion. Exxon said the acquisition would more than double its production in the Permian Basin.
“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge. The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis,” Exxon chairman and CEO Darren Woods said in a press release at the time.
Shares of Exxon and Pioneer were both little changed in extended trading Wednesday.
— CNBC’s Pippa Stevens and Mary Catherine Wellons contributed reporting.

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When to claim Social Security is one of the biggest decisions retirees face.
But financial advisors’ guidance may be biased, recent research finds.

Ascentxmedia | E+ | Getty Images

Many people claim Social Security retirement benefits at the earliest possible claiming age of 62.
But that decision prompts their monthly benefits to be reduced for the rest of their lives.

Working with a financial advisor should help encourage prospective beneficiaries to understand the value of delaying their benefit claims. Yet recent research finds working with a financial professional does not necessarily encourage individuals to claim Social Security at later ages.
The research — co-authored by David Blanchett, head of retirement research for PGIM DC Solutions, and Jason Fichtner, chief economist at the Bipartisan Policy Center — found the results varied based on advisor type. Higher wealth households tend to claim benefits two years later when working with financial professionals who are paid hourly, such as accountants, compared to households that work with commission-based advisors, or brokers.
Affluent households that work with any type of financial professional, particularly brokers, tend to claim Social Security earlier than those that do not, the research found.

The research concluded that delayed Social Security claiming may not be beneficial for advisors because it reduces client assets they can manage and may make retirement planning less complex.
“This research shows that financial advisors may be biased toward strategies that may provide higher advisor compensation, even if those recommendations are not in the best interests of their clients,” Blanchett and Fichtner wrote.

The research results are “really disappointing,” said Joe Elsasser, a certified financial planner who is president of Covisum, a Social Security-claiming software company.
“I would have at least liked to see a general later [claiming age] trend across all advisors,” Elsasser said.

Why it pays to wait to claim Social Security

When Social Security retirement beneficiaries claim at age 62, their benefits are permanently reduced.
If they wait until their full Social Security claiming age — which is generally between 66 and 67, depending on their year of birth — they may receive 100% of the benefits they’ve earned.
As the Social Security full retirement age moves to age 67, benefits available at age 62 are even further reduced.
By waiting until age 70, retirees stand to receive the biggest benefit boost — a monthly benefit that is 77% higher than what beneficiaries may receive at 62, the research notes.
But delaying until that highest claiming age requires beneficiaries to have other income on which they can rely in the interim. “Delayed claiming isn’t a free lunch,” the research states.

That may mean working longer or bridging to a higher claiming age by turning first to other investments.
Delaying Social Security benefits is so valuable not only because of the increase to benefits, but also the annual cost-of-living adjustments tied to inflation. No annuities on the market provide the same inflation links, the research notes.
To be sure, not everyone can wait to claim until age 70. Those who do delay tend to retire later or have more financial assets, according to the research.
“A lot of Americans don’t have an active choice on when to claim,” Blanchett said.
“If you know that you’re not sick, and you have some money saved for retirement, the odds are you should probably at least delay until 65, 67, maybe 70,” he said.

How to know if you’re getting good claiming advice

Not all financial advisors will have the same knowledge of the ins and outs of Social Security claiming, which comes with a multitude of rules.
Experts say there are signs prospective claimants can watch for to gauge the quality of the guidance they’re getting.
“If a consumer ever gets either a recommendation or an acceptance of an early claim, they’ve got to really evaluate … ‘Why is this advisor giving me that advice?'” Elsasser said.
Try to evaluate your financial professional’s process that led them to that conclusion, he said. Often, it’s a result of longevity assumptions that are too short, or the idea that Social Security benefit income that is claimed early can be invested.
Consumers can gauge longevity estimates using a free online tool, the Actuaries Longevity Illustrator, Elsasser said. Moreover, investment returns that are compared to Social Security should be based on more conservative holdings like government bonds rather than stocks, he said.
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Written materials provided by the Social Security Administration make it clear that evaluating when to claim is a personal decision, notes Fichtner, who formerly served as acting deputy commissioner at the agency.
A financial professional should also guide you through those same considerations — What is your health status? What other sources of income do you have? How will your claiming decision affect your spouse, if you have one?
Most prospective Social Security claimants are trying to make their money last, rather than maximize their returns, Fichtner said.
Consequently, a financial advisor’s recommendations — whether done independently or through a software — should emphasize protecting lifetime income rather than boosting returns, he said.
Surveys routinely show one of the top reasons Social Security beneficiaries claim early is because they are concerned about the program’s future. The program’s trust funds may run out within the next decade, at which point there may be an across-the-board benefit cut unless Congress acts sooner.
But experts say that’s not a reason to claim early. By delaying, any future prospective cuts would be applied to a higher benefit amount.
Even shorter-term claiming delays of months rather than years can help increase your lifetime income.
“Every month you delay, it’s a benefit increase,” Fichtner said.

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The Federal Reserve held rates steady at the end of its two-day meeting Wednesday, delaying the start of rate cuts and any relief from sky-high borrowing costs.
For consumers, it generally won’t get less expensive to carry credit card debt, buy a house or purchase a car.
“Prioritizing debt repayment, especially of high-cost credit card debt, remains paramount as interest rates promise to remain high for some time,” says Greg McBride, Bankrate’s chief financial analyst.

The Federal Reserve announced Wednesday it will leave interest rates unchanged as inflation continues to prove stickier than expected.
However, the move also dashes hopes that the Fed will be able to start cutting rates soon and relieve consumers from sky-high borrowing costs.

The market is now pricing in one rate cut later in the year, according to the CME’s FedWatch measure of futures market pricing. It started 2024 expecting at least six reductions, which was “completely fantasy land,” said Greg McBride, chief financial analyst at Bankrate.com.
That change in rate-cut expectations leaves many households in a bind, he said. “Certainly from a budgetary standpoint, not only is inflation still high but that is on top of the cumulative increase in prices over the last three years.”
“Prioritizing debt repayment, especially of high-cost credit card debt, remains paramount as interest rates promise to remain high for some time,” McBride said.
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Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to its highest level in more than 22 years.

The federal funds rate, which is set by the U.S. central bank, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
The spike in interest rates caused most consumer borrowing costs to skyrocket, putting many households under pressure.
Increasing inflation has also been bad news for wage growth, as real average hourly earnings rose just 0.6% over the past year, according to the Labor Department’s Bureau of Labor Statistics.

Even with possible rate cuts on the horizon, consumers won’t see their borrowing costs come down significantly, according to Columbia Business School economics professor Brett House.
“Once the Fed does cut rates, that could cascade through reductions in other rates but there is nothing that necessarily guarantees that,” he said.
From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at where those rates could go in the second half of 2024.

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to nearly 21% today — an all-time high.
Annual percentage rates will start to come down when the central bank reduces rates, but even then they will only ease off extremely high levels. With only a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Matt Schulz, chief credit analyst at LendingTree.
“If Americans want lower interest rates, they’re going to have to do it themselves,” he said. Try calling your card issuer to ask for a lower rate, consolidating and paying off high-interest credit cards with a lower-interest personal loan or switching to an interest-free balance transfer credit card, Schulz advised.

Mortgage rates

Although 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage is just above 7.3%, up from 4.4% when the Fed started raising rates in March 2022 and 3.27% at the end of 2021, according to Bankrate.
“Going forward, mortgage rates will likely continue to fluctuate and it’s impossible to say for certain where they’ll end up,” noted Jacob Channel, senior economist at LendingTree. “That said, there’s a good chance that we’re going to need to get used to rates above 7% again, at least until we start getting better economic news.”

Auto loans

Even though auto loans are fixed, payments are getting bigger because car prices have been rising along with the interest rates on new loans, resulting in less affordable monthly payments. 
The average rate on a five-year new car loan is now more than 7%, up from 4% in March 2022, according to Edmunds. However, competition between lenders and more incentives in the market lately have started to take some of the edge off the cost of buying a car, said Ivan Drury, Edmunds’ director of insights.
“Any reduction in rates will be especially welcome as there is an increasingly higher share of consumers with older trade-ins that have sat out the market madness waiting for an automotive landscape that looks more like the last time they bought a vehicle six or seven years ago,” Drury said.

Student loans

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected. But undergraduate students who took out direct federal student loans for the 2023-24 academic year are now paying 5.50%, up from 4.99% in 2022-23 — and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-Year Treasury notes later this month.
Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.
For those struggling with existing debt, there are ways federal borrowers can reduce their burden, including income-based plans with $0 monthly payments and economic hardship and unemployment deferments. 
Private loan borrowers have fewer options for relief — although some could consider refinancing once rates start to come down, and those with better credit may already qualify for a lower rate.

Savings rates

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
As a result, top-yielding online savings account rates have made significant moves and are now paying more than 5.5% — above the rate of inflation, which is a rare win for anyone building up a cash cushion, McBride said.
“The mantra of higher-for-longer interest rates is music to the ears of savers who will continue to enjoy inflation-beating returns on safe-haven savings accounts, money markets and CDs for the foreseeable future,” he said.
Currently, top-yielding certificates of deposit pay over 5.5%, as good as or better than a high-yield savings account.
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Upgrades could help consumers protect their home, typically one of their most valuable assets, from windstorms and other natural disasters.
But such upgrades can cost thousands of dollars.
The 2024 hurricane season is expected to be extremely active due to high-temperature waters. The latest forecast calls for 23 named storms, including 11 hurricanes.

Ryersonclark | E+ | Getty Images

Making your home hurricane resistant can be a significant financial undertaking. But it’s one that has the potential to pay off as such storms become more intense amid climate change.
In 2024, the national average cost to upgrade an entire house with hurricane windows runs between $1,128 and $10,293, or $100 and $500 per window, including installation, according to This Old House. And that’s just one project.

Upgrades could help consumers protect their home, typically one of their most valuable assets, from windstorms and other natural disasters.
About $8.1 billion could be saved annually in physical damages from windstorms if homes had stronger connections between roofs and walls, or tighter nail spacing, according to a 2022 analysis on hurricane-resistant construction by the Massachusetts Institute of Technology.

‘Now’s the time to prepare’

Hurricanes are among the most expensive natural disasters in the U.S., and experts say the storm-related damage is likely to become more significant as storms become more severe.
Some of the projected effects of global warming on hurricane activity include sea level rise increasing coastal flooding, higher rainfall rates and storms that are more intense and strengthen rapidly, according to a research overview from the National Oceanic and Atmospheric Administration’s Geophysical Fluid Dynamics Laboratory.
“Warmer sea surface temperatures intensify tropical storm wind speeds, giving them the potential to deliver more damage if they make landfall,” notes the Center for Climate and Energy Solutions, a think tank.

Projections from reinsurer Swiss Re show that since the 1970s, hurricane residential-loss expectations have been on the rise, in part due to an increase in hurricane activity and changes in property value from population growth. Improvements in building standards have offset some of that increase, however.
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Scientists anticipate an “extremely active” hurricane season in 2024 due to record-warm tropical and eastern subtropical Atlantic sea surface temperatures, according to hurricane researchers at Colorado State University.
The latest forecast calls for 23 named storms, 11 of which are slated to spiral into hurricanes. Of those, five are expected to reach “major” levels, or category 3, 4 or 5 storms with sustained winds of at least 111 miles per hour.
This year, the water temperature across the tropical Atlantic on average are about 1 degree Celsius, or 1.5 to 2 degrees Fahrenheit warmer than normal. While it doesn’t sound like much, it’s a big difference, said Phil Klotzbach, a senior research scientist at the Department of Atmospheric Science of Colorado State University.
“The tropical Atlantic right now is record warm,” he said. “That means more fuel for the storms that are trying to form.”
While atmospheric and water conditions may change, it’s wise for residents of storm-prone areas to think about undertaking home projects sooner rather than later.
“Now’s the time to prepare and have a plan in place,” said Klotzbach. “You don’t want to be making these preparations at the last minute.”

Hurricane resistance is about preventing ‘pressurization’

Hurricanes are different and unpredictable storms, said Jeff Ostrowski, a housing analyst at Bankrate.
“You don’t know if you’re going to be dealing with storm surge, or high winds or heavy rains. You’re trying to prepare for all those things at once,” he said.

It’s like a balloon that blows up, and when it blows up so much … it pops.

Leslie Chapman-Henderson
president and chief executive officer of the nonprofit Federal Alliance for Safe Homes

There are two key elements in your home to help prevent wind-related damage in a hurricane, according to Leslie Chapman-Henderson, president and chief executive officer of the nonprofit Federal Alliance for Safe Homes, or FLASH. You want to:

Make sure the structural strength between the roof and the wall can withstand wind pressure and impact of debris.
Protect all the openings in your home: the doors, windows and the garage.

“What we’re working to prevent is pressurization. It’s like a balloon that blows up, and when it blows up so much … it pops,” she said. “That’s what happens to your house when the wind comes in.” 

Ways to make your home more hurricane resistant

1. Have an inspector assess your house
Having an inspector come out to see your house is a good starting point for your projects. They will provide a report of what areas in your home need to be redone or reinforced against harsh weather.
2. Reinforce your roof
The average cost to replace a roof in the U.S. is about $10,000, but the exact cost will depend on multiple factors, like the size of your roof, according to the Department of Energy.
For someone getting ready to re-roof their house, Fortified, a nonprofit organization re-roofing program that helps strengthen homes against severe weather, will offer guidelines on how to make the roof sturdy to withstand challenges in your area, said Jennifer Languell, president and founder of Trifecta Construction Solutions, a sustainable consulting firm in Florida.
“It tells you want you need to do to make your roof more sturdy,” she said.
If you’re not ready to completely re-roof your house, adding caulk or an adhesive to strengthen the soffits of your house (that is, the material connecting the roof edge to the exterior walls) will reduce the probability of wind and water gushing into your attic in a storm, said Chapman-Henderson of FLASH. Repair jobs for the soffit and fascia, a horizontal board usually outside the soffit, can cost between $600 to $6,000, according to Angi.com.
The roof-to-wall connection is another thing to secure in an existing home with an attic. Installing metal clips and straps strengthens the hold-down effect, essentially anchoring your house, she said. While the exact cost will depend on factors like the size of your home and the scale of the project, such retrofitting costs span from $850 to $1,350, according to Kin, a home insurance company.

You can do all this stuff in terms of hardening the house, but you’re still kind of at the mercy of whatever storm comes.

Jeff Ostrowski
housing analyst at Bankrate

3. Secure your windows and doors
“Do you have hurricane-impact windows? If not, can you put them in?” said Melissa Cohn, regional vice president of William Raveis Mortgage.
If installing new hurricane windows aren’t in the budget, shutters are lower-cost options to protect windows and other openings, said Chapman-Henderson.
Different types of shutters vary by material, installation and price. Removable galvanized storm panels made of steel are $5 to $6 per square foot, making them the most affordable option, according to information compiled by FLASH.
It may be worth installing shutters as an extra layer of protection, even with impact-proof windows, said Trifecta Construction Solutions’ Languell.
Meanwhile, garage doors are the “largest and weakest opening,” said Chapman-Henderson. Replacing the entire garage door for a wind-rated or impact-resistant version can span from $2,000 to $9,000, according to FLASH.
Emergency bracings can be a lower-cost solution: temporary 2-by-4 wood braces can reinforce your nonwind-resistant door for approximately $150 for materials and installation. A garage door storm kit can run up to $750, FLASH data found.
“You can do all this stuff in terms of hardening the house, but you’re still kind of at the mercy of whatever storm comes,” said Bankrate’s Ostrowski.
4. Talk to your insurer about possible discounts
Strengthening your home against disasters may help lower your insurance cost.
Insurers typically factor in natural-disaster risks when deciding what properties to underwrite and at what cost. That’s why some are pulling back in high-risk areas, or raising prices significantly.
Insurance costs also tend to be higher for existing homes than newly built ones, because such properties were constructed under less stringent building codes.

Once you have an inspector visit your house and recommend projects to make your home more hurricane resistant, talk to your insurance agent about which of the suggestions are most likely to reduce your premium, Ostrowski said.
Keep in mind that each state is different in terms of what premium reductions are available and to what extent, and it depends on the risks, the company’s exposure and the regulatory environment, said Loretta Worters, a spokeswoman for the Insurance Information Institute.
Homeowners’ insurance premium rates are based on measurable risk and while mitigation efforts might help reduce the risk, the scientific measurement of catastrophe risk and mitigation efforts is still evolving, she said.
“All analysis of premium pricing related to mitigation efforts is a question of degree of risk, and not removal of risk entirely from the policy,” Worters said.

Grants, financing can help mitigate costs

If the cost to prepare your home against hurricanes is daunting, there may be grants, tax credits and other programs to help lessen the burden.
Some states have set up matching grant programs for disaster retrofits, said Chapman-Henderson.
In Florida, residents may be eligible to apply for matching grants that go up to $10,000 dollar-for-dollar match for approved upgrades like shutters, roofing and strengthening your garage door roof-to-wall connections, she said. There are similar programs in Alabama and Louisiana.
To find out more, homeowners can search for loans, grants or tax credits available in their state through dsireusa.org, which lists all of the funding opportunities and incentives to harden your home against disasters, Languell said.

For people with poor credit or who live in states that don’t have matching-dollar programs, Property Assessed Clean Energy programs allow a homeowner to finance upfront costs of eligible improvements on a property and pay the costs over time through the property tax bill, said Chapman-Henderson.
Energy-efficient mortgages, also referred to as green mortgages, may also be worth exploring. These loans are meant to help homeowners finance eco-friendly home upgrades or outright buy homes that help reduce energy consumption and lower utility bills, although they often have strict loan limits and require additional information during your application, according to LendingTree.
Depending on your hurricane-resistance project, that might be a fit: Sometimes, energy efficiency goes hand-in-hand with durability, Languell said.
“Sealing the underside of your roof sheathing would also help you from an energy standpoint because it’s sealing all the cracks and crevices,” she said, as this repair both keeps your roof on your house and helps avoid water or air leaks.
The same goes with window replacements: “If you are going to replace your windows from a single-pane window to an impact window that has a better energy performance, it’s saving you on energy,” Languell said.
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