When you think about solar panels, you might think about their environmental impacts, especially as Earth Day 2021 approaches. And it’s true — going solar is a great way to do your part to ensure a healthier planet for all of us. But did you know that solar panels are more than just a way of going green? In fact, they can be a powerful financial tool toward protecting you against inflation.
At first, it may seem difficult to see the connection between spending money to install solar panels on your roof, and helping you ward off negative financial impacts for years to come. But we’re happy to share the little-known truth with you about how solar panels can be an investment with benefits for years to come. Especially as you get near retirement age.
Keep reading to learn more about how solar panels can help protect you against inflation.
Making Investments for the Future With Retirement in Mind
From a young age, many of us are taught about the importance of planning for the future. Whether that means setting aside our money for an emergency, contributing to a retirement account, or something else. We know that our money has to work for us not only now, but in the future as well.
Many people choose to not only save for the future, but also invest. Investing is a way of contributing a certain amount of money now, and expecting it to work hard for you over time. Common types of investments include our retirement accounts, like 401(k) plans, Roth and Traditional IRAs, and other types of investments like stocks, bonds, certificates of deposit, mutual funds, and more.
Each of these investments has some type of inherent risk. And it’s important to find the balance that works for you for the current stage of your life. The risks associated with investing in stocks are higher, as the stock market is quite volatile; certificates of deposit, on the other hand, are quite secure. The tradeoff is that your return on investment — what you get out of your investment — isn’t very high when it comes to these “safe” investments.
As people move closer and closer to retirement, many financial advisors advise their clients to move away from riskier investments and toward more stable ones. That’s because, in retirement, you need your investments to provide you with guaranteed income. If the markets have a bad day, your money likely doesn’t have as much time to recover. And you need that money to work for you for years to come, inflation and all.
But regardless of the investments you make, investments are almost never guaranteed to provide a return.
Solar Panels as an Investment
Solar panels, however, are one investment you can make that guarantees a return. Now, can solar panels really be considered an “investment”? When most people think of investments, they think of the typical financial instruments mentioned above.
Investopedia — whose name seems to imply authority when it comes to investing — defines an investment in this way: “An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in value at some point in the future.”
Solar panels are absolutely an investment. While many people may turn toward solar panels for the environmental benefits, many others decide to go solar for the financial benefits. The hope of generating income at some point in the future.
And installing solar panels is one of the best ways of saving money on your electric bill. Generating income for yourself that you wouldn’t have otherwise. Consider these statistics:
In 2019, the average American family spent $1,408 on electricity. But using solar panels to generate your own electricity, you can lower your electric bills — or even eliminate them altogether.
In Kansas City, the average solar customer saves an average of $1,535 per year by switching to solar panels. While solar panels do require an upfront investment for purchase and installation, those savings translate to an average of $30,718 over 20 years.
Inflation and the Rising Costs of Electricity
Going through life, you can do your very best to make good investments. But almost none of them are guaranteed to perform. Except, with solar panels, you can be certain you’re going to see your return on that investment.
And that’s especially important when it comes to retirement. In retirement, without a regular income earned from a job, you’ll have to rely on the money you have saved and the investments you’ve made. For the most part, you are probably living on a fixed income, which may include payouts from your retirement plan, pension plan, and/or Social Security.
But while your income may be more or less “fixed,” most expenses in life are not. And this is especially true as more time passes during your retirement years. If you look back on the costs of certain items 20 or 30 years ago compared to now, it’s easy to understand why it should be expected that costs are going to change over the years.
Here’s an example that you may be interested in, especially if you’re considering solar panels: The costs of electricity 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.
Over 25 years, a typical retired couple can expect to spend about $58,000 on electricity. That’s operating under the assumption that electricity costs inflate about 3-3.5% each year, on par with recent trends.
Now, let’s go back to the topic of solar panels. What if you decided to install solar panels in order to make an investment with a guaranteed return? And to help protect yourself against inflation at the same time? With most solar systems, it only takes 8-10 years to see that return on investment — that point where you’ve totally recovered the initial money spent.
For the remaining 15 or more years, you’re only putting the would-be costs of your electric bill back in your pocket. And you can put that money toward other things that help you live well during your retirement years.
KC Solar Wants to Help You Save Money
At KC Solar, we’re a local-owned company with our customers’ best interests in mind. And that means we want to help you save money. Don’t fall victim to rising electricity costs and inflation. We’ll help you take the steps you need to become energy independent.
Contact us today with any questions, or to get a free quote.