So, you are ready to retire. You’ve worked hard for many years and you now look forward to spending time with grandchildren, fishing, golf or taking that long-delayed trip to Hawaii.
However, there are just a couple problems that may need to be resolved. First, who will take over the farm?
Young people are not exactly beating a path to the doors of those farmers who are thinking about retiring. Young people instead are leaving the farm in favor of a life style in the city which they find more satisfying.
It is a scenario facing more farmers. According to the USDA’s 2007 Census, (the 2012 Census is still in the works) the fastest-growing group of farm operators is those 65 years and older.
The graying of America’s farmers is not a new phenomenon. The most recent statistics peg the number of U.S. farmers over age 65 at 823,000. Between 2002 and 2007, the number of farmers age 65 and over grew by 20 percent. A similar increase in the 2012 Census figures would put the number near 1,000,000.
Finding someone to take over the farm may require creative efforts by those looking to retire. Even those whose retirement is not planned for years will benefit from starting their planning now.
Because of the large values typical on many farms today, a gradual process over a number of years may be needed for a retirement to go as planned. A son or daughter, for example, may take on increasing labor responsibilities as well as increasing income, over several years. Eventually, a transfer of the farm assets can take place, sometimes the equipment first, then the land and/or livestock.
If no son or daughter is available or interested in taking over, another option is to groom someone outside the family. This is often a great opportunity for someone who wants to own a farm but has older siblings who are in line ahead of them.
Rutgers University has created a website to assist farmers in retirement planning. The site delves into topics such as retirement income, financial assessment, asset distribution and tax issues.
The website emphasizes the importance of both parties having a clear understanding, with a binding written legal contract, of how a transfer will take place. Getting an early start on transfer of farm ownership is the key to success. If you’re 55 years old and want to retire at 65, you likely would benefit by exploring your options now.
The Center for Rural Affairs provide six examples of agreements between new farmers or ranchers and retiring farmers.