Rutgers Cooperative Extension Later Life Farming Online Course

Barbara O’Neill, Robin Brumfield, Stephen J. Komar, and Robert Mickel

Rutgers Cooperative Extension

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• Course URL: http://laterlifefarming.rutgers.edu/

• 10 modules related to retirement planning for farm households.

• Topics are areas of concern indicated by two focus groups of farmers:

– Above age 50

– Currently farming in New Jersey

– Conducted in the Summer of 2008.

Project Overview

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Farm Household Demographics• Average age of farm operators: 57.1

• 20% increase in age 75+ farmers from 2002 to 2007

• Farmers work longer than people in many other occupations (work and home are intertwined)

• Most common farm types:

– Residential/lifestyle farms (36%)

– Retirement farms (21%)

• Much of farm households’ wealth is illiquid

• Great diversity in farm household incomes

– See http://www.ers.usda.gov/Publications/EIB67/EIB67.pdf

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• Perceptions about retirement

• Retirement role models

• Future plans to farm

• Planned sources of retirement income

• Questions about retirement planning and investing

• Greatest financial hope

• Greatest financial fear

• Impact of regulation on land values/retirement plans

Focus Group Question Topics

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• Most will farm at least part-time in retirement

• Most had positive retirement role models

• When no heirs are interested in farming, the farm’s future is uncertain

• Most had some type of retirement account such as an IRA (often through a spouse)

• Fear of government regulation, high medical expenses, family feuds, and losing the farm

• Unique set of retirement challenges (e.g., farm transition)

Major Findings

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Several FG participants avoided tax-deferred savings plans for the self-employed because of

Future income uncertainty

A desire to avoid administrative paperwork,

The legal requirement to fund employees’ accounts if they make plan contributions for themselves.

Concerns About Retirement Plans for the Self-Employed

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• Few financial planners have expertise in farm financial management.

• Previous sale of development rights to generate positive cash flow now limits options.

• A smooth and equitable transfer of the farm concerns families with farming and non-farming heirs.

• Legal restrictions and regulatory impacts on development and land values.

Farmers’ Concerns Regarding Retirement

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• http://laterlifefarming.rutgers.edu/

• Many farmers plan to work past traditional retirement age AND need to convert land and other farm assets into a liquid stream of income.

• We used original material AND links to resources such as Who Will Get Grandpa’s Farm? Communicating About Farm Transfer and the Retirement Estimator for Farm Families (Purdue University)

Later Life Farming: Creating a Retirement Paycheck

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Dr. Barbara ODr. Barbara O’’NeillNeillRutgers UniversityRutgers Universityoneill@aesop.rutgers.eduoneill@aesop.rutgers.edu

Later Life FarmingLater Life Farming Web site address:Web site address: http://http://laterlifefarming.rutgers.edulaterlifefarming.rutgers.edu/ /

Questions? Comments?