5 Tips for Building Renewable Wealth in Retirement

5 Tips for Building Renewable Wealth in Retirement

September 22, 2023

Renewable energy has garnered widespread popularity across various industries, sparking innovation and sustainability. What if we approach wealth-building with a similar mindset?

Renewable wealth is a concept that involves making mindful financial decisions that serve our best interests - while helping the next generations' needs. In a society marked by environmental concerns, social responsibility, and economic uncertainty, pursuing wealth has taken on a new dimension. Building renewable wealth is a conscious strategy to encompass ongoing financial prosperity and future peace of mind.

Let's explore 5 key tips for building renewable wealth and how they interconnect to create a sustainable and purpose-driven approach to financial success. But first...

What is Renewable Wealth?

Renewable wealth is a financial strategy that focuses on leveraging your resources for optimal financial growth. It redefines traditional notions of wealth by highlighting the importance of conscious decision-making in tandem with financial growth. A fitting way to describe/explain this idea is through the chicken and egg analogy:

Consider savings (or income) as the egg and investing (like in stocks) as the chicken. Savings, the eggs, offer a consistent return, much like the sustenance provided by food. When you reinvest those savings, it's akin to acquiring more chickens, which, in turn, produce more eggs. This cycle consistently repeats: the more chickens (investments) you have, the more eggs (returns) you get. Over time, due to the magic of compounding, this leads to exponential growth in your investments. It's a balance between steady income (the eggs) and accelerating growth (acquiring more chickens), culminating in sustainable long-term wealth.

So, how do you create the right balance and build a "renewable wealth portfolio"? It all starts with your mindset.

1. Having The Right Mindset 

The renewable wealth strategy involves adopting a specific mindset that aligns with ethical and innovative social initiatives. Ultimately, renewable wealth seeks to create a harmonious synergy between financial growth, environmental preservation, and the betterment of society for future generations.

We often think wealth is only about money, but it is more than that. Your positive or negative mindset plays a crucial role in your wealth-building journey. Coined the "Millionaire Mindset," being wealthy isn't just about having a lot of money. It's more about adopting a specific mindset. For its followers, this mindset means shifting how you see the world to reach your dreams and requires consistently adopting purposeful habits and thoughts.

Essentially, wealthy retirees often operate from a mindset of plenty, which boosts their confidence and success. To help you reach your goals, act as if you've already achieved them. In that space, your success fuels more success.

2. Maximizing Income 

Maximizing income to pursue renewable wealth involves a two-fold approach: seeking financial opportunities and ensuring they align with your goals. The higher your income, the more you can allocate towards savings and investments, accelerating your wealth-building journey. 

Moreover, a higher income allows you to comfortably meet your daily needs while setting aside substantial retirement funds. Here are a few tips to help you maximize your income:

  • Diversify Your Renewable Wealth Portfolio: A typical portfolio could include bonds, bond funds, CDs, and dividend-paying stocks. If you are seeking to invest for a greener future, you can align your investments with your values by investing in products that seek attractive returns while benefiting society, such as investing in clean energy stocks. Furthermore, ESG investing means buying the shares of companies that score highly on environmental and societal responsibility metrics.
  • Utilize Individual Retirement Accounts (IRAs):  IRAs are tax-advantaged retirement savings accounts that individuals can contribute independently. IRAs allow you to tailor your renewable portfolio to risk tolerance and financial and personal goals.
  • Explore Real Estate Investments: Real estate investments offer retirees a diverse range of options to consider. From owning rental properties that provide steady cash flow to investing in Real Estate Investment Trusts (REITs), you have various avenues to leverage the potential benefits of real estate in your investment portfolios. What's more, investing in "green buildings" and eco-friendly developments not only helps reduce carbon emissions but also provides financial returns through energy savings, tax incentives, and higher property values.

When combined with prudent financial planning and strategic investments, maximizing your income is a powerful means to secure a comfortable retirement.

3. Timing the Market

Financial markets are unpredictable, and staying patient when your investments are on the line can be challenging. Take the example of the S&P 500 index: after reaching its lowest point in October 2022, it has managed to recover most of the losses suffered during the bear market. The previous year was marked by a decline of at least 20% from its highest value. By the end of July 2023, the S&P 500 was down by just 4.4% from its peak in January 2022. This recovery showed improvement compared to the notable 25% drop experienced in October 2022.

This lesson shows that if you leave the market too early or a market drop never materializes, you could miss out on significant additional positive returns. By staying invested rather than trying to time it — it could yield better results over the long term.

Staying patient and waiting out volatility is key to building renewable wealth. 

4. Preserve Your Legacy

Renewable energy is all about creating a safe and sustainable future for the next generations. In order to create renewable wealth for your loved ones, you need to protect your hard-earned assets to pass down. 

Estate planning entails creating various documents, outlining the designating of healthcare proxies, and establishing powers of attorney if you were to pass away. This level of preparation can bring peace of mind to you and your family. Without a clear estate plan, the distribution of assets can lead to conflicts and disputes among family members. Other benefits of having an estate plan include the potential to minimize tax burdens, help secure your family business continuity, and have the power to help ensure your loved ones receive their inheritance.

5. Working With a Financial Advisor

An experienced financial advisor can help you chart a course that aligns with your financial goals and values. As economic conditions, tax laws, and personal circumstances change, you must revisit your retirement strategy and make necessary adjustments. This may involve reevaluating your investment allocations and risk management approach to ensure they align with your evolving needs and financial situation.

Staying informed about market trends and working closely with your financial advisor can provide valuable insights and guidance. At Agemy Financial Strategies, our team of financial advisors is here to walk you through the process of achieving renewable wealth so that your money can work hard for you and you can reap the benefits of a comfortable retirement.

By regularly reviewing and adjusting your plan, you can make informed decisions to help maximize your retirement savings and help ensure financial security for loved ones - and future generations. 

Last Thoughts

Building renewable wealth transcends the traditional pursuit of financial success. At Agemy Financial Strategies, we understand that building wealth that survives more than one generation requires more than financial assets.

With the proper planning, you can set up your renewable wealth portfolio to bring financial success for hundreds of years.

Set up your complimentary strategy session here today.