Rutgers New Jersey Agricultural Experiment Station [Later Life Farming]

Module 1d: Retirement Issues and Challenges for Farmers

As a farmer facing retirement, you face some similarities, but many differences, compared to others planning for retirement.  Below are some unique concerns:

  • Farmers tend to be attached to their land and generally have considerable equity tied up in farm land and equipment.  While selling this land could create income for retirement, this may mean transferring the farm to the next generation or selling it to others to farm, or for a non-farm use. Any of these choices can be emotionally difficult because the land may have been in the family for more than one generation.
  • In addition to the emotional attachment to the land, as a farmer, you often have an emotional attachment to farming.  It is often said that farming is a way of life, not just a job.
  • As a farmer, you may have most of your net worth tied up in land, leaving few liquid assets to invest in retirement savings accounts.
  • Farmers are less likely than others to be covered by pension plans or employer sponsored plans. You may have a pension plan, however, if you and/or your spouse have off-farm income.
  • Farming tends to create variable income from year to year because of such factors as weather, market demand, commodity prices, government policies, insects, diseases, etc., making it hard to contribute a set amount to a retirment fund each year.
  • If you have more than one child, or no children, making retirement plans and other estate planning decisions becomes difficult.  For example, if one child wants to farm, how do you transfer the farm to that child while being fair to the other children and still have enough money to fund your retirement?  If there are no children, who will operate the farm after you retire?

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