Retirement planning is a unique experience for farmers. Jared Nelson is an insurance agent and financial advisor with Rural Mutual Insurance. He says farmers have several things to consider depending on what they want to do with the farm and themselves when they retire. Nelson says farmers are in a unique situation compared to most people.

“The basic issue when we look at retirement is liquidity. If you have the normal nine-to-five, people own their home, and they might have a cabin or some hunting land, but the vast majority of their savings are liquid in the form of a 401 K, retirement, or bank accounts. With our farms, if we have excess capital, it’s usually put into land, machinery, animals, and continuing and growing the operation which is good for the farm. However, it does pose some challenges because you can have several million dollars worth of net worth but only $2,000 in the bank, so liquidity is our biggest concern for retirement and cash flow.”

It’s also going to be a big change in mindset when farmers retire.

“It is. There’s no magic switch to turn from getting up and doing chores and doing the fieldwork, then all of a sudden, I don’t have to. So, I encourage a lot of people who are starting into this retirement conversation to be prepared to have maybe a seasonal job. The first thing I tell them to do when they retire is to go to work, but that’s what these people know what to do, not just for the income part of it, but you need to have something to do so whether it’s a part-time or seasonal job or traveling. Think about what that looks like.”

The amount farmers will need to retire depends upon their individual situations.

“That’s going to differ vastly in lifestyle and hobbies. Are you going to be traveling? Are you going to be working part-time? People need to start looking at the budget. The farm has been paying for all of the household bills, and if we’re not going to be doing that on the farm anymore, we just have to make a budget spreadsheet and look at what do we have for monthly expenses. Now, what do we want to do? What can we do? If somebody doesn’t go on a lot of trips or vacations, that’s different than somebody who wants to travel two or three times a year.”