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5 Tips for Building Renewable Wealth in Retirement

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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.

Disclaimer: This content is for educational purposes only and should not be considered financial or investment advice. Please consult with the fiduciary advisors at Agemy Financial Strategies before making any investment decisions.

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How to Prepare for Retirement in a Volatile Market

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For every investor, the world has become a hard place. But for those reaching retirement, pressure is significantly mounting. Here’s how to cope with a roller-coaster market on the lead up to your golden years. 

When you think of retirement, many Americans imagine a fun and relaxing lifestyle. However, preparing for retirement is no easy task– especially with volatility and rising interest rates. This past year has been especially challenging to plan for retirement. The economy has been turbulent and many are having a hard time keeping up with the cost of living.

It’s estimated that 1.5 million retirees have re-entered the U.S. labor market over the past year due to such factors as more flexible work arrangements, rising costs, and the inability to keep up while on a fixed income (according to an analysis of Labor Department data by Nick Bunker, an economist at Indeed). Additionally, 25% of Americans feel they have to delay their retirement plans because of disrupted savings resulting from increased prices and market instability.

During such an uncertain time many are second guessing their road to retirement. However, a down market should not deter you from reaping the benefits of a fruitful retirement. Here are a few tips to help you prepare for your golden years in a volatile market.

Evaluate Risk Tolerance

When it comes to risk tolerance, having a diversified portfolio will help minimize the impact of risk and total loss in a volatile market. The right mix of investments for you will depend on your unique circumstances, including your age, investment goals, and risk tolerance.

The key is to find the right balance of risk and reward for you.

Investing Without Emotions

It can be hard not to invest with emotions. After all, it’s your hard-earned cash you’re watching rise and fall. Market volatility is a stressful environment for anyone with money in the stock market. Investing with emotions can lead to significant losses.

It can be difficult to impulse buy or sell stocks when the market is experiencing a hiccup. In the end, it’s hard to predict market behavior—so try not to make any risky or permanent decisions regarding your portfolio when it’s likely that current market conditions are temporary. Stick to your investment plan and build on these important building blocks:

  • A retirement date. Figure out how long you’ll have to save.
  • Your major life goals. Plan for small and big events in the future.
  • Your tolerance for risk. Find your comfort zone.

Your plan is like a safety belt when the market starts seesawing. Stay on track by sticking to it during market swings.

Having a Plan in Place

When it comes to planning for retirement, having a long-term plan can help ease stress and keep you on track for the long-run. Market volatility can tempt you to want to ditch your plan, but it’s important to think long-term. If you’re nearing retirement it may be an appropriate time to make some small changes in order to reduce the chances of major risk. Make sure to rebalance your investment plan on a regular basis — quarterly, semiannually or once a year. Why? Because volatile markets can change the proportion of your funds in different asset classes. Therefore, rebalancing resets your portfolio to your desired investment mix.

Note: It’s important not to make any significant changes without consulting your financial advisor. A trusted advisor is crucial to your success when preparing for retirement during a volatile market.

Final Thoughts

Don’t let market volatility derail your retirement savings plan. With the market’s current conditions, it may not be as smooth of sailing as you’d hope for–but market downturns don’t last forever.

The investment professionals at Agemy Financial Strategies can help you make sure your investments and assets are mixed to create a balanced plan for your unique retirement goals. Regardless of a volatile market, we can help strategize asset allocations to help stomach inflation, or revise your current plan to make helpful amendments.

If you’re looking for more ways to prepare for retirement with inflation, connect with the team at Agemy Financial Strategies here to help you get started on your portfolio diversification journey today.

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Volatility Returns to the Stock Market, and May Well Stick Around

September was a rocky month for the stock market and may have offered a stark preview of what the final weeks leading up to the presidential election will be like for Wall Street. Towards the end of the month, both the Dow Jones Industrial Average and the S&P 500 were flirting with correction territory, which officially means a 10% decline from their peak highs.* Meanwhile the Nasdaq was down by more than 10%, as the tech rally that has helped buoy the index and the markets in general throughout the Covid-19 crisis ended. With one of the most contentious elections in American history now just weeks away, and the coronavirus still pummeling parts of the economy, a nervous, mostly down-trending market may very well be the norm right up to November 3rd, and possibly beyond that.

In truth, what we saw in September was typical from a historical perspective. The two months before a presidential election are almost always a volatile period for the markets for two reasons. One is simply uncertainty over the election’s outcome, and that’s obviously a big factor where this race is concerned. Most polls continue to show Joe Biden leading among voters, and Wall Street knows a Biden victory would likely mean a rollback or amendment of the Trump administration’s corporate tax cuts. That, of course,

could further undercut economic growth at a time when it’s already shrunk massively due to the pandemic. On the other hand, there is plenty of debate as to whether a Trump victory would automatically be better for the economy and trigger a new market rally—particularly in light of the pandemic.

The other issue that typically makes big investors nervous just before an election is the legislative inertia that occurs. Politicians are too focused on politics to get anything done, and that’s a major concern this year since the House and Senate have yet to agree upon a follow-up to the Coronavirus Aid, Relief and Economic Security (CARES) Act approved in March.** This is true despite the fact that lawmakers and economists almost universally agree that additional relief measures are needed, especially with all the uncertainty still surrounding the pandemic as we head into fall.

Autumn’s Unknowns

As I’m sure you’re aware, the U.S. surpassed 200,000 deaths linked to Covid-19 in September, the most of any nation in the world.*** Meanwhile, infection rates began spiking again across much of Europe, and in parts of America as schools reopened. Will that trend continue as autumn deepens? It’s possible, and the economic impacts could ramp up again too as outdoor seating options that have allowed many restaurants and other businesses to hang on during the summer months disappear in colder parts of the country. The dining industry has already been hit extremely hard by the pandemic. According to an economic impact analysis by Yelp, over 50% of its restaurants had already closed permanently by early summer, and the number has likely increased since.****

Even if no major resurgence in infections does occur this fall, the economic fallout of the coronavirus crisis seems likely to drag on for other reasons. Those include the psychological impact of the pandemic, and the comfort level most consumers have attained with alternative forms of shopping and recreation. Already, major chains have announced they will not host traditional in-store “Black Friday” sales this year, and for the first time ever, the Macy’s Thanksgiving Day Parade will be an entirely virtual event!

So far, the massive shift to things like e-commerce, videoconferencing, and virtual entertainment has managed to offset the impact of business closures and social distancing rules and helped limit some of the economic damage from Covid-19. However, the longer-term repercussions of this shift have probably yet to be felt as they relate to things like jobs, bottom-line corporate growth, and overall economic stability. Big investors know this, and it’s another reason they’re likely to keep “one finger on the trigger” in the last quarter of the year, ready to pull out if nervousness gives way to fear and triggers another major market downturn.

Uncommon and Unprecedented

While a nervous market in the months before an election is historically common, there also some things about our current situation that make it very uncommon—namely the pandemic and the highly divisive political climate surrounding this election. So far Wall Street has shown amazing resilience in the face of these issues, but that’s due largely to another factor that isn’t merely uncommon but entirely unprecedented. That is the massive amount of artificial stimulus the Federal Reserve has pumped into the economy since the Financial Crisis 10 years ago— which has become even more massive as a result of the pandemic.*****

Will the Fed’s “steroids” continue to pump up Wall Street and stave off another major correction even if coronavirus cases see another major spike this fall? Or even if another relief and stimulus package is not approved? Or even if there is a lengthy legal and congressional battle over the results of the election that prolongs legislative inertia and keeps Washington stuck in the muck like a stalled Jeep?

The bottom line is that these are all important questions to consider as you review your financial strategy this fall. Are you playing smart and sufficient financial defense at this crucial time? Are you well-positioned to take advantage of new opportunities that may emerge one day when the markets and economy are more stable again? Because, rest assured, that day will come!

*Marketwatch.com **“Virus Bill Blocked in Senate as Prospects Dim for New Relief,” AP, Sept. 10, 2020 ***“Unfathomable US Death Toll from Coronavirus Hits 200K,” AP, Sept. 22, 2020 ****“Yelp Finds 53% of Restaurants Have Permanently Closed,” Eater.com, June 26, 2020 *****“Stock Markets Have Now Seen the Peak of Fed Stimulus,” MarketWatch, Sept. 17, 2020

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