Are You On The Fence About Retiring From Farming?
CAI Auctioneer, Land Broker
Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from the World Wide College of Auctioneering, and has achieved the PRI designation from the Professional Ringmen Institute. Jason and his wife founded DreamDirt in 2005, and the company continues to be a leader in the farm auction space and prides itself in offering extensive land seller and buyer information.
Email: email@example.com | Phone: (515) 537-6633
Is It Time To Retire From Farming?
In October 2014 we wrote a post Is It Time To Retire From Farming and we’ve put one full farming season between us and that post. Certainly in 2014 we could see the writing on the wall, commodity prices had begun falling in July 2013 and we knew the costs of farming were sure to lag behind its ability to produce income.
Farmers love farming. Its not a typical job and the people are not typical people. At a desk job you can almost quote the exact day you will walk out and never come back. There is rarely the same person investment in that line of work and the connection is not hard to break. Farming is different and as we experience a time where farmers ages average a higher number that in the past we have to ask “why not retire, why not get out while the getting is good” There could be many answers to that question, every situation is different and with a different set of considerations. Some have told me that they will die farming, retirement is not an option because they don’t know what they would do. In that case is downsizing a better option?
The opposite is also true, some want to retire but they don’t really know how to go about it. Its not a desk job, you can’t just write a slip of paper and hand it to somebody who will inherit all of the responsibility you leave behind. Instead when a farmer retires he is likely to have a great deal of work to do to shut down his operation that range from balancing the books to hiring an auctioneer. There are legacy considerations, tax considerations, financial considerations, legal considerations and each of them carries their own decisions and affects the other.
So what does a farmer do when they retire? Its important to understand that at retirement many farmers do not have 401K’s or other retirement vehicles. They have instead invested their time and money in a farm which is their 401K. The very first farm I ever sold at auction I sat in the living room with the couple who were about to trust a brand new auctioneer with their life savings said to me “This farm is our life savings, we don’t have a 401K, this farm is our 401K” Farmers by nature are investors in iron and dirt, they put all of their money there and live from the farm. When its time to retire if the farm is not being passed on to other family members it can be rented or sold to produce income. Thats a decision a farmer has to make for his real estate investment at retirement. Which is the best route? What are the considerations? Can the rental income support you long term? What is your capital gain and tax consequence?
Some farmers retire and sell their machinery to build a little nest egg while renting their farmland to another farmer. Some sell it all and live from the proceeds the rest of their life. No situation is the same, everybody will have different considerations but whats important is that when its time you seek the qualified advice of professionals. Among others your Lawyer, Accountant, Real Estate Broker and Auctioneer can play an important role in your retirement process to make sure it transitions smoothly. Each will be an important part of the puzzle to ensure you do not leave any stone unturned and guide you through the process.
If you end up reading this article you were likely researching the thought of retirement to find those things you have not thought of. At DreamDirt our staff of real estate brokers and auctioneers face the sitaution often and can provide you with a plethora of advice and help you spot things that need attention or just take some of the work load from you. We are thought of as the fast talkers that sell stuff but thats a small portion of the service we provide our clients. From the initial consultation and helping you understand the liquidation process to power washing and lining up equipment we can help your make your retirement less stressful. We provide free consultations, free appraisals and everything is 100% confidential even if you decide “just one more year”
4 Articles about Farmer Retirement
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