Why Making Solar Power Part of Your Retirement Plan Might Make Smart Financial Sense
See 4 Ways Solar Energy Extends Financial Health Even on Fixed Incomes
Installing solar panels at your farm or rural small business could sweeten your retirement and be one of the best financial decisions you make.
Whether you’re approaching retirement or already living it, your financial plans have probably shifted quite a bit from 20 years ago. You now have different priorities and concerns. Your biggest uncertainties now center around making your income and savings last the rest of your life.
Even if you’re technically ‘retired,’ you may still be operating your farm or rural business in some capacity. Or, maybe you’ve cut back, sold it, or passed the workload to the next generation.
Installing solar panels at your farm or rural small business could sweeten your retirement and be one of the best financial decisions you make.
Whether you’re approaching retirement or already living it, your financial plans have probably shifted quite a bit from 20 years ago. You now have different priorities and concerns. Your biggest uncertainties now center around making your income and savings last the rest of your life.
Even if you’re technically ‘retired,’ you may still be operating your farm or rural business in some capacity. Or, maybe you’ve cut back, sold it, or passed the workload to the next generation.
Retired farm life
Many retired people live on fixed incomes. Farmers often continue living on the same land as their business, even if someone else is doing the work. Others have downsized to a smaller farm, or even moved to a more conventional home. And you probably have some investments in various retirement accounts working for you too.
So let’s see how solar power provides a positive lift to four major areas of finance that concern retired farmers and rural business owners:
- Inflation
- Farm value
- Stock market investments
- Taxes
Solar power and inflation — Extending your finances in retirement
One estimate found that a typical retired couple can expect to spend more than $100,000 on utility bills over the next 25 years.
You can do some research to learn more about how much solar power costs, but if you spent $30,000 on a solar energy system that saved you $60,000 on electric bills over the next 25 years, does that seem like a good deal?
2 to 1 ROI? Sounds good to us!
25 Years of Beating Inflation
Ag Solar’s panels come with a 25-year warranty, so that 25-year figure isn’t chosen at random. Your panels will save you money for 25 years, at minimum, and those savings may increase over time because the cost of power from the utility will continue to rise.
Put another way, you’re offsetting kilowatts, not dollars.
If your solar panels produce 1000 kWh per month and you use 1200 kWh per month on average, then you’ll only be paying for 200 kWh per month. If prices rise 3.5% per year, that 1000 kWh produced by your panels saves you more and more money each year. That’s good retirement planning.
As another approach, if you choose to finance your solar energy system rather than pay for it all up front, you now have a fixed monthly payment rather than an ever-increasing power bill due to inflation. And with solar financing, even though you’ll pay it back over a few years, you get the entire federal tax credit all up front.
Solar power and property values — Increasing net worth in retirement
Recent studies show that homes (or farms) equipped with solar panels sell for higher amounts than those without. These results were seen across the country, not just in California.
From an investment standpoint then, solar energy pays you back not just on your power bills, but if you choose to sell your farm. If you intend to pass your farm on to your heirs, you’ll be giving them a higher value farm if you equip it with solar panels.
Here’s a happily retired couple giving several reasons why they put solar panels on their home.
Own vs rent
Solar panels in retirement go right along with the ‘own vs rent’ mentality.
You chose to own your land and farm rather than rent, because it builds in value over time. With solar energy you own your power, instead of renting it from a utility that charges you more and more each year — just like a landlord.
If you own your farm and own your power, your overall farm value goes up.
Solar power and investment – Beating the stock market in retirement
A remarkable study found that investing in solar energy would actually reap a higher return than the stock market in 46 out of the 50 largest U.S. cities.
The math and finance language can get a little complex, but here’s the main takeaway: The higher rates of return were due to inflation, market volatility, tax credits and incentives, how much solar offsets your energy bills, and other factors.
A secure low-risk investment
In retirement, one of the greater concerns is making your investment assets last as long as possible, in part because you’re often on a fixed income. That’s why most financial advisors recommend reducing risk as you get older. The stock market is risky.
But solar energy never loses money, because your array keeps producing energy, even when the market crashes. You’ll be saving on power bills no matter what, reducing your daily cost of living in retirement.
Solar power and taxes – Reducing tax burden in retirement
Some states pay you back for extra solar energy your panels generate. It’s called net metering. Other states offer additional ways of compensating you for installing solar power on your farm or rural small business.
None of this income is taxable.
In addition, many states offer tax rebates and credits simply for installing solar panels, and the federal government provides a generous tax credit for solar installation (though it could expire soon, so don’t delay).
Farms and agricultural businesses can also apply for a REAP grant, which can result in tens of thousands of dollars in additional savings.
Credits, not deductions
It’s important to emphasize that these are tax credits, not deductions. A credit knocks down your actual tax bill. A deduction just lowers your taxable income. So if you owed $5000 in taxes, but had a $5000 tax credit, you’d pay nothing. If you owed $5000 in taxes, but got a $5000 tax deduction, that would merely lower your taxable income by $5000, but you’d still owe most of the $5000.
Still nice, but far less in real dollar savings than the credit.
The solar tax incentives are credits, not deductions.
Is solar energy right for you in retirement?
You’ve now seen four ways solar energy benefits your short and long term financial health:
- Protects you from electric bill inflation
- Saves on taxes
- Increases farm value
- Outperforms the stock market
Here’s another way to look at it — 5 reasons solar is right for your farm.
But remember — the federal tax credit could expire soon, so don’t wait.
Now is the time to ask questions and find out if installing solar power during retirement makes good financial sense for your farm or rural small business. Getting a solar quote is free, and you can ask all the questions you need answered from our Ag Solar consultants.
Ag Solar doesn’t use high pressure sales tactics. We genuinely want to help people understand what they’re getting and be able to determine if it’s a good deal. There are some situations where we have told people solar power might not be a good choice for them, such as having too much shade on their property.
Ask us to come visit your agricultural business.
