You may have never considered it before, but solar panels are a great part of any retirement planning strategy. Don’t believe us? We’ll be happy to explain why solar panels make great financial sense for retirees.
We’ve put together a list of four of the ways solar panels can help save money in retirement. Keep reading to learn more.
1. Protect Against Inflation
Going solar is one of the best ways to protect against the rising costs of electricity. With solar panels, you can lock in the cost of your monthly energy bills. The stable monthly payments help you avoid financial surprises — and eventually, your monthly electric bill may disappear altogether.
During retirement, most people are living on a fixed income which may include payouts from your retirement plan and/or Social Security. But while your income may be fixed, most expenses are not, especially as more time passes during retirement. It’s reasonable to expect that costs change over the years.
For example, electricity costs increased by 30% between 2010 and 2020, according to data by the U.S. Energy Information Administration. And energy prices are highly likely to continue climbing.
A typical retired couple can expect to spend a total of $58,000 on electricity over 25 years — assuming that electricity costs inflate about 3-3.5% each year.
Now, what if you decided to install solar panels? With most solar systems, it only takes 8-10 years to see your return on investment. For the remaining 15 or more years, you’re only putting the would-be costs of your electric bill back in your pocket. Sounds pretty good to us!
2. Increase Your Home’s Value
Getting a great return on investment makes sense when it comes to adding solar panels to your forever home. But what if you don’t plan to stay in the same home throughout the length of your retirement?
With many people choosing to downsize or relocate to be closer to family — or the beach — at some point during retirement, it’s a fair question to ask. But the truth is that solar panels are extremely valuable when it comes to increasing your home’s value.
Studies have consistently shown the strong relationship between solar energy — and other eco-friendly features — and the monetary value of a home. According to Energy.gov and Berkeley Lab, potential homebuyers see solar panels as home upgrades, just like a renovated kitchen or finished basement.
More than 80% of surveyed home buyers reported that they value energy efficiency when choosing a home to buy. And many are willing to pay a premium for those features.
According to research by the National Association of Realtors (NAR), 37% of home buyers were willing to pay an additional $10,000 for a home that saved $1,000 on electricity costs annually. They were willing to pay even more for homes that saved more on electricity. And a U.S. Department of Energy survey found that homes with solar panels sold for approximately $15,000 more when compared to similar homes without solar.
So, whether or not you’ll be in the same home for the entire duration of your retirement, you can rest assured that your solar panels will pay off in one way or another.
3. It’s Safer Than the Stock Market
Many people contribute to a 401(k), IRA, or other type of retirement fund as they go through life in preparation for retirement. And many people also choose to invest some amount of money in the stock market. Especially if you started investing many years ago, there’s a good chance that your money has grown substantially since you made that first investment. Whether it was a startup that made it big, or shares of your employer’s stock that may have split again and again over the years.
But as retirement begins to inch closer and closer, your financial goals begin to change. Many people don’t have the benefit of time, or the tolerance, to continue investing in the stock market. That’s because it can be very volatile — it changes frequently. When it comes to retirement, you need a stable source of income you can depend on.
You want your investments to last you as long as possible. And we challenge you to look at investments in a variety of ways — investing doesn’t only mean the stock market. When you decide to go solar, you’re making an investment as well. It likely won’t pay off immediately, but that’s not what investing is about. It’s about looking toward the future to see those benefits come full circle.
In fact, solar panels are one of the safest investments you can make, especially as you near retirement. Your solar panels will never lose you money — they’ll only continue producing energy which will save you money through the length of your retired life. No matter what the markets are doing.
4. Reduce Your Taxes
When it comes to the cost of solar panels, the good news is that you likely won’t have to pay for it alone. What does that mean?
Thanks to the federal Investment Tax Credit, new solar installers get back 26% of the cost spent on their system through the end of 2022. Here’s an example:
If the cost of your solar system were an even $10,000, you would receive a $2,600 credit back from the government when you file your taxes the next year. If you theoretically owed the IRS $2,600 in taxes, your new total owed would be $0.
If you owed the IRS $1,000, you would owe $0 this year and have a $1,600 credit for the following year. Going solar can help lower your tax bill — potentially for years to come.
Learn more about paying for solar panels and the options available.
KC Solar: Working for Our Community
No matter what stage of life you’re in, we at KC Solar believe solar panels can be a great fit for your current lifestyle and goals. We’d love to chat with you!