By Carrie Muehling
CHICAGO – Many farmers believe they can’t retire.
Some don’t even think they would ever want to. But spending less time on the farm could be possible with a little planning.
“Many of them are realizing that when they do a little bit of searching amongst themselves and maybe a spouse is that, maybe they do have an inclination to do something else other than just work 16-18 hours a day, six days a week. And with proper planning, maybe they can start taking a step back from that,” said Jim Hughes, financial security consultant with Country Financial.
Hughes recognizes that most farmers don’t want to quit farming completely, but they might have some other goals when they reach retirement age. Sometimes it is a question of when to pass that farm on to the next generation.
He gave the example of a 68-year-old farmer whose wife was experiencing some health problems and whose son was ready and willing to take over as the active farm operator.
“They did have a farming child who had been involved in the farm for the last 30-some years. The problem was, that child had no ownership whatsoever. They had no track record with any of the input suppliers that were there. So the farm’s credit, you might say, was all based upon Mom and Dad’s financial statement,” said Hughes. “And the son now, trying to take over a 3,000 acre farming operation, had no balance sheet. He’s just been nothing but an employee for all those years, and they’re finding it’s a struggle to get input credits and to get the same type of buying opportunities that the current generation was benefiting from. So it takes some planning.”
Hughes said it is really no different than succession planning for many other kinds of businesses. He said it is always better to have a plan in place before something forces change like a health issue or a death in the family. While many farmers might not think of themselves as a business owner, they need to realize that some of the same tools are available to them when it comes to retirement planning. In retirement, farmers often need investments besides the land they own.
“Having land as our only investment does tie our hands,” said Hughes. “It’s very hard to turn that into liquid dollars. It’s very difficult with today’s commodity prices to look to the family farmer who is continuing and say, ‘Give me a bonus.’”
Especially with low commodity prices, the farm operator might not have the cash flow to provide to retired family.
Hughes presented with a panel of farmers during last month’s Illinois Farm Bureau Annual Meeting in Chicago.
Carrie Muehling can be reached at [email protected].
