By Darren Wurz
Mitigating rising costs during periods of inflation is crucial to safeguarding your financial stability. One solution that’s gaining popularity among homeowners is investing in solar panels. This sustainable and renewable power source could keep your energy bills from overrunning your budget while reducing your carbon footprint.
Federal Tax Credits: A Financial Boost
Embracing change to combat the climate crisis comes at a cost that the U.S. government is willing to pay. When you install solar panels, you might qualify for significant financial incentives in the form of federal tax credits.
The Federal Residential Energy Tax Credit is issued as a percentage of the installation cost for a solar photovoltaic (PV) system. The installation costs include the equipment, labor, and other related expenses. If you’re installing a solar PV system between 2022 and 2033, you’ll have a tax credit of 30% (thanks to the Inflation Reduction Act).
Getting a portion of what you spent back on your taxes helps offset the cost of the initial investment that solar panels require. If you live in a state that incentivizes solar, you might also pair this with a state tax credit for an even bigger boost. To know if that’s the case for your state, you’ll want to check the Database of State Incentives for Renewables & Efficiency.
Inflation Effects: Shielding Against Rising Costs
One of the advantages of investing in solar panels is their ability to hedge against inflating energy costs. You’ve probably noticed that when inflation rises, so does your energy bill. Solar power, however, remains relatively stable in the face of inflationary pressures. There’s also potential for a rebate from your utility company if your panels generate excess electricity that contributes to the utility’s electric grid (aka net metering).
Even though the initial investment ranges from $5,000 to $40,000, it can be financed through fixed payments over 15 to 25 years. Often, the fixed payment could even be lower than your current electric bill. The annual energy savings alongside feeling like you’re single-handedly saving the world could balance out the initial investment!
Energy Savings: A Sustainable Investment
Investing in solar panels provides long-term financial advantages with the added benefit of reduced carbon emissions. An underrated benefit of using solar panels is being able to produce your own electricity; doing so reduces dependence on traditional energy sources. It also reduces monthly electricity bills and even eliminates them entirely. Forbes estimates that the average solar household could save up to $1,500 per year in energy costs.
Over time, these savings accumulate and allow solar households to better plan and allocate their finances even during times of increased inflation. With the potential for additional income from net metering or selling excess power to the electrical grid, the choice to go solar becomes an even more enticing option.
Plan Your Transition to Clean Energy
Solar panels require a large initial investment, but the benefits far outweigh the disadvantages. It’s a sustainable form of energy that could reduce your monthly costs, lessen your dependence on the grid, and could earn you money in the long run.
Are you concerned about inflation’s impact on your retirement planning? We’re here to help. Schedule a no-obligation consultation, and together we’ll find a solution to help you combat inflation and even use it to your advantage. Contact us at 859-291-9879 or firstname.lastname@example.org today!
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Darren Wurz is a fee-based financial advisor and co-owner of Wurz Financial Services, where he operates the Northern Kentucky/Cincinnati office. He is a CERTIFIED FINANCIAL PLANNER™ professional and has a master’s degree in financial planning from Golden Gate University. Darren specializes in serving the unique financial planning needs of attorneys and law firm owners. He is the host of The Lawyer Millionaire Podcast and author of The Lawyer Millionaire: The Complete Guide for Attorneys on Maximizing Wealth, Minimizing Taxes, and Retiring with Confidence, published by the American Bar Association.
Darren is a member of the American Bar Association and the Financial Planning Association. He is also active in his local community as a member of the Northern Kentucky Bar Association, Cincinnati Bar Association, Covington Business Council, and Northern Kentucky Chamber of Commerce. To learn more about Darren, connect with him on LinkedIn.