A secured financial future is the key to a comfortable retirement. However, the rising cost of electricity and unavoidable expenses can quickly eat up your monthly budget. But you can use your roof to generate passive income with the help of solar power. How?
Read on and understand the surprising advantages of solar and how it can boost your retirement savings.
Whether you are planning a retirement in the coming few years or expecting it shortly, diversifying your retirement plan is vital to minimize monetary risks in the future.
A well-planned and calculative retirement strategy starts with analyzing current needs and future requirements. It is never too late to begin a retirement plan and examine ways to manage your expenses once a stable source of income is gone.
Some people invest their funds in stocks, bonds, and properties and others focus on reducing living costs and overheads. One of the biggest expenses for an individual after retirement can be electricity as its cost is increasing greatly.
Here, solar panel installation is one solution to minimize electricity costs while giving you energy dependence and contributing to a brighter financial future.
This blog delves into the top benefits of harnessing solar power and how is the right path to build a comfortable and secured retirement.
First, let’s compare solar panels with other popular retirement investment plans to gain a better understanding and make the right decision.
Comparison of Solar Panels with Other Top Retirement Investments
Having a well-planned retirement plan in place is crucial. Many people invest their funds in popular investment options like stocks, bonds, and real estate. You need to carefully balance returns, investment timeframe, and risk tolerance as each option carries its own set of benefits and drawbacks. Although investment in stocks, bonds, and real estate are traditional options to diversify financial portfolios, solar power offers unique benefits for retirement.
Solar power investment comes with many benefits including solar tax credits, environmental, and other financial advantages. We will compare solar panels with other common retirement investments to help you make the right decision to secure your future.
Potential Returns
Stocks: Stocks offer high potential returns. However, there is a high chance of potential financial loss as the market is extremely volatile.
Bonds: Bonds offer low potential returns. Also, a high rate of interest is charged on long-term bonds which also affects the issuer’s potential to pay off bondholders.
Real Estate: Investment in real estate offers moderate returns. Although the value of properties gets appreciated with time, it falls behind during the inflation period.
Solar Panels: Solar panels offer moderate returns. A solar system doesn’t offer a direct income but long-term savings on electricity can help in combating rising energy costs. Plus, with many solar incentives offered, your savings can be enhanced further.
Risk Assessment
Stocks: Stock markets are highly volatile which translates into high risk. Market fluctuations lead to a significant monetary loss in the short term.
Bonds: Bonds are comparatively less risky than stocks. This investment offers consistent returns with less volatility.
Real Estate: Real estate carries moderate risk. Although real estate investment appreciates with time, there are risks associated with property management, ongoing maintenance costs, and market fluctuations.
Solar Panels: Solar panels have low risk. Once the PV system is installed, it starts contributing to savings on electricity. There are comparatively lowl risks of any significant monetary loss.
Investment Timeframe
Stocks: To get good returns, investors are required to make long-term investments and sail through market fluctuations. Therefore, the time involved in reaping returns from stocks is quite long and requires patience.
Bonds: The time frame required for bond investment ranges from short, medium, to long-term. Bonds are a great option for investors who want to generate adequate income in a stable market within a specific period.
Real Estate: Real estate is a long-term investment. It requires additional ongoing management compared to other investment options.
Solar Panels: Solar is a long-term investment. Solar panels are robust and come with a lifespan of 25 to 30 years. A solar system provides consistent savings on electricity costs throughout its lifecycle.
Initial Investment
Stocks: There is no minimum investment limit for the purchase of stocks. Investors can start with small or large amounts according to their risk tolerance.
Bonds: Bonds are purchased in minimum denominations of around $1000. Investors can purchase bonds in small fractions from their choice of investment platforms.
Real Estate: The initial investment in real estate is quite large. From down payments and potential remodeling expenses to ongoing maintenance costs, all these outlays add up to the real estate investment. For example, down pay for a property can range from 3% to 20% of the total value.
Solar Panels: The upfront cost of solar installation depends on the size, number, type, location, and brand of panels. The average cost of a residential solar system in the US varies from $10,000 to $30000. Using various solar financing options and government incentives solar seekers can offset this initial investment cost.
Liquidity
Stocks: Stocks are extremely liquid. Investors can easily buy and sell stocks in the market.
Bonds: Bonds are moderately liquid. Once an investor purchases bonds, they can sell them before their maturity period. However, they have to incur penalties if they sell it before maturity.
Real Estate: Investment in real estate has low liquidity. Selling properties is not only consuming but also includes additional transaction costs.
Solar Panels: Solar panels have low liquidity. Once installed, removing solar panels can be expensive and time-consuming. Although solar panel installation increases home value, selling them separately can be a challenging task.
Diversification
Stocks: Stocks can greatly contribute to the diversification of investor portfolios. However, exposure to volatile market conditions can impact potential returns.
Bonds: Investment in bonds provides stable portfolio diversification. However, bonds fail to keep up with inflation.
Real Estate: Real estate investment contributes to portfolio diversification. However, it requires ongoing management and significant capital to make this investment.
Solar Panels: Solar system offers unique diversification advantages to people making this investment. It saves huge money on electricity, reduces reliance on the traditional grid, and minimizes the effect of the rising cost of utility.
Top Advantages of Solar Power For Retirees
Whether you are approaching your retirement or have a couple of years to say goodbye to your office, financial security is your key priority. Here investment in solar panels can help you attain this goal and offer unique advantages to make your retirement period peaceful and stress-free.
The below-mentioned are the top advantages of solar power for retirees.
Increased Financial Security
Minimum Electricity Bills
The major advantage of solar panel installation is a reduction in electricity costs. Traditional grid systems use fossil fuels, gas, or coal to generate electricity which is not only expensive but also adversely affects the environment.
When you install solar panels on your home rooftop, you can see a significant difference in your electricity bills. Solar panels utilize sunlight to generate electricity which is clean and sustainable. It doesn’t impact the environment and reduces your carbon footprint.
This means you enjoy green energy, and save money each month which contributes to your retirement savings.
Tax Incentives and Government Rebates
State and federal governments offer several incentives for homeowner who install solar panels on their property. These solar incentives include rebates, federal tax credits, net metering program, property tax exemptions, and much more. The most significant solar incentive is a federal tax credit provided by the government wherein homeowners can offset 30% off the entire solar installation cost.
This credit is offered to homeowners who own the entire solar system. 30% is the current rate that is offered to solar-equipped homes. However, this percentage will decrease to 26% in 2033. If you want to get maximum credit i.e. 30% for a solar project, this is the right time to make this investment.
Enhancement of Home Value
Homes with solar panels comparatively sell faster and at a higher price than those without them. Many studies have shown that buyers are more likely to pay additional money to purchase a house equipped with solar power.
This means if you decide to sell your house after retirement or plan to relocate, you will get up to $15000 extra for your property. This significant financial benefit can make your retirement secure and stress-free.
Shield Against Inflation
There is no brainer that electricity costs are rising and will continue to grow in the future. Inflation is contributing to an increase in the cost of electricity. However, if you generate your own electricity through solar panels, rising costs hardly affect your utility price.
When you generate your own electricity, volatile energy prices due to inflation don’t impact your energy usage or bills. With solar power, you can enjoy green and clean energy with long-term cost stability after retirement.
Minimum Maintenance
Solar panels are made robust which is why they require minimal maintenance. A typical solar system comes with 25 to 30 years lifespan. Plus, it comes with 25 year warranty which means if anything goes wrong, it will be taken care of by the solar provider absolutely free of charge.
As there will be a limited source of income once you retire, you don’t need to worry about solar panel maintenance. If dried leaves, dust, or dirt gets accumulates on panels, a normal wipe with a clean cloth or running water can make your solar panels more efficient. However, for major cleaning and maintenance, you will have to reach out to a professional.
Sustainability and Environmental Impact
Reduced Carbon Footprints
Traditional grid system depends on fossil fuels, gas, or coal to generate electricity. This process emits a lot of harmful gases including carbon dioxide into the atmosphere which adversely affects the environment. On the other hand, solar panels produce electricity through sunlight which is clean, unadulterated, and renewable. Solar power reduces your carbon footprint and contributes to making the environment cleaner.
When you invest in solar panels, you are not only reducing your reliance on the grid but also doing your bit towards the betterment of the environment. Retirement means enjoying the leisure time and relaxing. When you know that you are producing green energy and contributing towards environmental betterment, this gives you more peace of mind.
Why Solar Is a Great Retirement Investment?
The below-mentioned highlights the key reasons why solar is a great investment for retirement.
- Solar panel installation boosts the overall value of your home. Many studies have shown that buyers are willing to pay an additional $15000 for a house equipped with solar panels. Houses with solar panels tend to sell faster and at a higher price.
- Solar panels meet different levels of energy requirements throughout the year. Using solar power, major appliances like air conditioners, washing machines, fridges, etc. can function efficiently round the clock.
- Using solar financing options or solar loans, you can enjoy green energy without breaking the bank.
- Right after the solar installation, you can see drastic changes in your electricity bills.
- Solar panels give you more control over your energy consumption.
- Solar power reduces your reliance on the traditional grid.
- Using solar panels, you can generate your own electricity without impacting the environment. As solar panels are clean and unadulterated unlike conventional grid system that uses fossil fuels, coal, and gas to generate electricity, you reduce your carbon emissions drastically.
The Closure
By now, you must have understood the importance of solar panels and how they can boost your retirement savings. Although stocks, bonds, and real estate are some of the popular investment choices, solar power comes with a unique set of benefits that make it worth investing.
Solar panels can slash your electricity bills, augment your home value, shield you against rising inflation, reduce your carbon footprint, and much more.
If you are looking for ways to strengthen your retirement savings and make a positive impact on the environment, you should consider solar panel installation.
Transitioning to green energy not only unlocks the path to financial independence but also contributes towards a better environment for many generations to come.
All and all solar is a smart investment that can boost your retirement savings for sure!
