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Serving: WI

Keep farming or retire?

red and white outbuildings, silos behind
EVOLVING PLAN: Plans are meant to be updated and adjusted as needed, so continue to evaluate what might work best for your future retirement.
Agrivision: Farm couple wonders if it is time to slow down.

I’m 69 years old and my wife is 68; we’re both in good health. We sold the cows four years ago, but we still grow crops on 375 acres. My wife works part time at the bank. Originally I was planning to retire when I was 70, but used machinery prices aren’t so good, and I’m not sure if people are still buying farms. I’m wondering if we should stick to our original plan — sell our machinery and either rent the farm to a neighbor or sell the farm. Or would we be better off continuing to farm for two or three more years and then retiring? We owe $75,000 on our machinery, but the farm is paid for. None of our three children is interested in farming and all have jobs in town.

Hodorff: I think you have a good plan. Selling your machinery would help start your transition. I would suggest finding a financial planner to help you plan your income stream for your retirement.

You will be faced with some tax implications as you start to divest your assets. After you turn 70 years old, you become eligible for some different treatment of income. If you see a financial adviser, he or she will be able to talk you through all these tax and income scenarios. Your thought about selling the farm would work also. Land is still in high demand. As you consider selling the land, be sure you work closely with the financial planner.

Miller: Financially, you are in great shape. You have options available, including continuing to farm or renting the land and retiring. The bigger questions are: What are you going to do with your time, and does it make more financial sense to sell the equipment and start collecting rent now or continue to operate for a few more years? The second question will require a visit with your tax adviser. In addition, complete a partial budget to determine your returns on growing crops on 375 acres vs. the net return from renting the land to a neighbor.

Your banker, Extension ag agent or farm technical college trainer can assist you in completing a partial budget to compare the rent vs. crop option. As for what to do with your retirement days, that will require a conversation with your spouse. Good luck making an informed decision on both questions.

Wantoch: The agricultural economy has its ups and downs. While we may be in a down cycle right now, I’m sure we’ll see this cycle turn around. When this might happen is the million-dollar question. I would encourage you to consult with a tax preparer or accountant and see what your tax basis is on your farm machinery and real estate. 

For equipment, the basis would be the original cost of the piece less any depreciation you may have taken over the years. To determine your potential gain on a sale, subtract the basis from the potential sale price of your machinery. Even though you’ll need to pay the remaining loan balance, this will not affect the gain calculation. After you have calculated the gain, you’ll be able to figure out the tax that may be incurred from the sale.

If you feel that used machinery prices will increase and you’ll be able to pay your income tax liability, then you might want to continue farming for a few years. If not, consider selling the machinery and look into your options for rent or sale of your real estate. Plans are meant to be updated and adjusted as needed, so continue to evaluate what might work best for you and your wife’s future retirement.

Agrivision panel: Doug Hodorff, Fond du Lac County dairy farmer; Sam Miller, managing director, group head, agricultural banking, BMO Harris Bank; and Katie Wantoch, Dunn County Extension ag agent specializing in economic development. If you have questions you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919, or email

TAGS: Management
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