Farming: Planning for “Some Day” Your Future Years

What Is Your Retirement Fantasy?

Who Are You?• A. “Here are the keys and the farm checkbook

kids. We’ll call you from Florida.”

• B. “We’re ready for a break from the labor….but we’re not quite ready to retire, we’d like to get to full retirement to maximize social security, but that won’t be enough.”

• C. “We’d like the on-farm child to be able to continue, but what about the off-farm children? A fair inheritance isn’t always equal

• D. “The kids can have it when they pry my cold, dead hands off the tractor steering wheel!”

Farmer Retirement & Succession Survey

70605040302010 Australia England France Ontario Quebec VA Japan NC NJ PA IA ’00 IA‘06

Baker, J.R., Epley, E. 2009. Iowa Farmers Business and Transfer Plans. http://www.extension.iastate.edu/bfc/pubs/IA%20Farm%20Business%20survey%20results.pdf

Will retireSemi-retireNever retire

What are your priorities for your farm and family for the future?

Other Farmers’ Priorities

• Preservation of the family farm• Financial viability of the family farm• Farm as a retirement package

Research by Ron Stover, Mary Kay Helling, South Dakota State University, 1997.

Research Says When asked about what they would miss when they retire or semi-retire, the most common responses are connected with lifestyle, described in several different ways. Several Australian farmers expressed the loss of being in the outdoors, with one stating: I will miss the solitude of the place, the views, the company of the animals, the night sky and the privacy.Australian farmers all noted the loss of an active lifestyle, open spaces, and the independence that farming allowed them to experience. When asked what they would not miss about farming, Australian farmers noted the long hours, hard physical labor and working in extreme weather conditions are all things they would not miss after retiring from farming.

Research Says A study that included farmers in Canada, England, Australia and the United States found there are differences in age of when responsibilities are given to the successor and types of successor: those that take the direct route and those that a diversion route. The successors that take the direct route are more likely to develop intangible assets such as managerial skills.

Financing retirement has differences between countries: Canada relies more heavily on selling assets such as land, England relies more on private pensions, but all countries use a variety of funding methods.

The study also includes data on degree of retirement. The United States led the way for farmers never fully retiring from the farm.

Research Says

Farm families often differ from other workers. Many are emotionally attached to their primary investment (farmland), and they don't expect to retire (i.e., stop farming) as much as reduce work hours or the scope of their operation.

Things to think about….• Identity / Control• Social • Physical• Family • Financial • Professional• Community support• Faith Activities

Some Day List

• Organize photos• Restore Antique

tractors• Family /Farm

Genealogy• Build a New Home• Time for hobbies• Travel• Major purchases

• Clean Farm Office• Play the piano• Help with young

person’s education• Maximize

investments• Time with children

and grandchildren• Reading for

pleasure

How to Get started on the someday list

• Think of one big ticket item & one little ticket item

• Long Term and short term – definitions

• Walk through example• What are your long term and short

term steps for you big and little ticket items

Maintenance of Your Plan

• Re-visit your someday list periodically or after major life changes

• Communicate your goals with important people in your life

• Don’t delay, start now and work with a partner

Pull out the page labeled “As I think about my future years”

Take a minute or two to fill in just the first two sections:

These are words I want to use to describe my future years

These are words that I don’t want to use to describe my future years

In my future years, these are things I want to:

• Do• Be• Have• Contribute

• What do I need to be doing now to make this happen?

Summary/homework

• Worksheet 2-1• Timeline homework• communication

Questions?