Question: My wife and I are both 62 years old. She works full time off the farm and I crop farm 250 owned acres and another 200 acres which I rent from a neighbor. We have the farm and machinery paid for. Ideally I would like to retire in three years and rent the land out to a neighbor, but with three years of low crop prices, I’m thinking I will continue farming until crop prices go up. I’m not talking $7 corn or $15 soybeans, but I want to be able to sell my machinery for a good price and retire on a high note rather than retire when things are not so good like they are now. I’m thinking it could be a few years before we see decent crop prices. I might have to wait to retire until I am 70 which isn’t bad, my dad was 75 when he retired. My question is how long in advance should you decide you are retiring? Can I just decide to retire a couple months before I do it or do I have to plan this year's in advance? Please advise.
Hodorff: When making decisions about retiring, crop prices should not be part of the discussion. Crop prices will continue to fluctuate. You have a partial plan so continue with it. I would recommend meeting with a tax person and financial advisor to help fill in some of your concerns. If you do some planning with this the time factor will be answered. You should spend time thinking about your income stream after you retire. Your decision to retire should be planned in advance which I think you have done. At your age you are thinking about retiring well in advance. You are being proactive in thinking though your future plans. Engage some professional help which will help reduce some of your anxiety about retiring.
Miller: Planning in advance will outline the options that are available to you. In particular, tax planning for the sale of farm and machinery assets that are paid for and likely have a low cost basis. You don’t have to nail down a date for when you will retire but by working with your accountant and attorney you can understand the options that are available to you as you contemplate the retirement date. This would include the timing of when to sell particular assets, the tax implications of those sales and your future income streams through rents or other investments to be able to provide for living expenses in your retirement years. This is also a great time to update your wills and estate plans. Planning early should provide peace of mind to allow you to make the decision on your terms at the appropriate time.
Wantoch: It’s never too early to begin planning for retirement. Some consider retirement to be a journey and not a destination. I don’t know many farmers who truly retire from farming since they love working in agriculture and tend to stay involved at some level. There are many components to review when considering retirement so I would suggest that you and your wife have a conversation about when you both will retire. If she is working off the farm, does she carry the benefits for the family, such as health insurance? This can be one of the largest expenses for your future family living needs, and health care costs don’t seem to be declining. There are other expenses that should be considered and I would encourage you to complete budget projections for future corn and soybean production. Looking at these facets will allow you to determine when you would like to retire on that “high note.”
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 agricultural agent specializing in economic development. If you have questions that you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919 or e-mail them to [email protected]