High Fives of Solar
Retirement Investment Strategy
Experts say that the the average American needs to save $1 million to enjoy a comfortable retirement. Unfortunately, most of us are behind in our savings. Fortunately, going solar can help us catch up on our retirement investments. Call EcoMen Solar at 732-SOLAR-NJ.
The average American will spend about 20 years in retirement, according to the US Department of Labor. And most of us won’t be able to rely on Social Security to meet all our needs for income during retirement. Especially if you want to enjoy your retirement stress free and visit your grandkids, go on a cruise or be prepared for unexpected medical expenses not covered by Medicare or private insurance, you’ll need to supplement Social Security.
As fewer and fewer employers provide pensions to their retirees, more workers have to rely on their own savings to get them through retirement. And you may be surprised to hear that financial planners recommend that you accumulate $1 million in savings before you retire. That sounds like a lot of money. But if you split it up over 20 years, it’s about $50,000 per year, which is hardly a king’s ransom.
Unfortunately, few Americans have that much money by the time they retire, as CNBC reports:
Those between the ages of 55 and 64 who have retirement savings only have a median of $120,000 socked away, Bankrate reports in a new survey, citing data from the Federal Reserve. That’s only 12 percent of the $1 million many experts recommend, and it’s worth noting that even that doesn’t stretch as far as it used to.
Those aged 65 to 74 aren’t doing much better: They have a median of $126,000 saved in retirement accounts. That “won’t last long in the absence of paychecks,” the survey notes.
That’s why you’ll hear financial planners telling you that you need to start putting money in your 401(k) or Roth IRA when you’re still in your twenties. Only by socking away money every month for 40 years or so can the average worker hope to have enough savings for a comfortable retirement.
It’s no surprise that most of us are behind in our retirement savings. These days, it’s just not easy to find ways to save money every month, even if you live frugally. You can downsize your home or get a second job and start saving more in time to still make a difference — if you’re still in your twenties or thirties, that is.
But by the time you reach your forties or fifties, it’s not so easy to catch up if you’ve fallen behind on retirement savings.
If that’s your situation, don’t worry. First of all, you’re not alone. Second of all, there may be a solution: getting solar power at home.
Going Solar Can Help You Catch Up
You already know that solar can save you money while helping you go green. But maybe you never thought of solar power as a retirement investment.
Fortunately, lots of financial experts have already run the numbers. The bottom line is that solar is actually a very good retirement investment for just about anybody with a suitable home to put the solar panels on and an electric bill above $100 per month.
Even better, for people in their forties and fifties, solar turns out to be a good way to catch up if you’re behind on your retirement savings.
Like most investments that are suitable for retirement, solar is safe. Unlike the stock market, where you can lose your original investment if your stock falls below what you paid for it, with solar you know that for the next 30 years or more, your panels will continue to generate electricity, saving you money each month.
But unlike most other safe investments, such as money market accounts or municipal bonds, which offer annual returns of 6% or lower, solar gives a relatively high rate of return on investment. According to a study done in 2015 by the North Carolina Clean Energy Technology Center, across the country, home solar financed with a loan will do as well as or better than the stock market as measured by the S&P 500 index.
The study, Going Solar in America: Ranking Solar’s Value to Consumers in America’s Largest Cities, finds that “in 46 of America’s 50 largest cities, a fully-financed, typically-sized solar PV system is a better investment than the stock market.”
With a 90-year average return for the S&P of 9.8%, this means that you could be earning 10% or more per year from going solar. For an investment that’s safe and predictable, that’s a very competitive return.
It’s no wonder that more and more workers in New Jersey these days are choosing solar power as part of their retirement investment strategy. Just take the example of Ocean County, which has more solar installations than any other county in New Jersey, a full 16,000. And with 21% of its population age 65 or older — compared to the statewide average of 15.8% — Ocean County and its popular beach communities have more retirees than most places. Maybe all those retirees know that solar is an especially good deal for them?
Why Solar Is A Great Retirement Investment
Here are a few other reasons why solar is a great choice for a retirement investment:
- Unlike most cash or equity investments, you can get started with solar for no money down through loans and other financing. And you start seeing the benefit right away, as you save money on your electric power from the first month.
- Solar can cover all or nearly all of your electricity demand throughout the year. This means that the average home in New Jersey can save $1,000 or more per year with solar. But unlike earning that same $1,000 on the stock market, returns from solar savings are tax free because they come from money saved rather than interest or capital gains earned.
- Speaking of SRECs, in New Jersey so far, they have been a way for you to earn monthly income from your solar system. After the assembly passed and Governor Murphy signed new legislation on solar this spring, the future of SRECs is not clear. But the state will probably either adapt the program or replace it with something else that will benefit solar owners.
- Solar panels can increase the resale value of your home. A study by the Lawrence Berkeley Labs showed that home buyers nationwide were wiling to pay an extra $15,000 for a home with solar panels installed.
If you have a need for tax deductions, then buying your own solar system makes good sense. That will allow you to take advantage of the 30% federal solar tax credit. If you don’t have enough tax liability, then a lease may be a better option for you. Either way, getting solar at home with no money down and money savings starting in the first month will help you save money that you can apply to your retirement savings.
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Retirement Investment Strategy
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