Transferring the Farm and Creating a
Retirement Paycheck
2010 National Women in Agriculture
Educators Conference
Robin G. Brumfield, Barbara O’Neill,
Stephen J. Komar, & Robert Mickel
Rutgers Cooperative Extension
Project Overview
• 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.
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Later Life Farming (LLF) Project Goals
• Help farmers prepare for retirement
• Help farmers generate adequate retirement income
• Help farmers create a retirement “paycheck”
– Convert illiquid assets into cash and plan sustainable asset
withdrawals so that savings lasts a lifetime).
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Specific Objectives
• Increase the financial security of farmers in later life.
• Discuss investment asset allocation and prudent retirement
asset withdrawals to reduce the risk of outliving assets
• Present crop insurance as a risk management and wealth
accumulation tool.
• Help farmers consider strategies to make up for lost time
and learn strategies to jumpstart their savings.
• Address concerns about the impact of regulation on
farmers’ financial security
• Link to existing websites to avoid “reinventing the wheel.”
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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%)
• Median income (2004): $53,700; 21% > all U.S. households
• 95.1% of farm households had higher median net worth
• Much of farm households’ wealth is illiquid
• Great diversity in farm household incomes
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Theoretical Model:
Social Marketing Theory
• People adopt new ideas when they feel they have
received something of value from program organizer
• Program organizers need to address consumer needs
and wants
• Strong focus on identifying and meeting consumer
needs
• “Get inside the head” of target audience to identify
how they think and behave
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Project Methods
• Held two face-to-face focus groups in 2 New Jersey
counties
• Participants included:
– Full-time farmers
– Part-time farmers
– Land owners
– Renters
– New producers
• Gave $50 gas card as an incentive to participate
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13 Focus Group Questions
• 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
• Preferred educational delivery methods and topics
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Major Findings
• 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)
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Concerns About Retirement Plans for
the Self-Employed
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.
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Preferred Information Delivery Methods
• One group preferred traditional Extension
programming, (meetings and workshops).
• The second group was receptive to non-traditional
educational methods , i.e., Internet.
• Cooperative Extension viewed as a trusted, nonbiased, information source.
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Farmers’ Concerns Regarding Retirement
• 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.
• It is important not to postpone estate planning decisions.
• Legal restrictions and regulatory impacts on development
and land values.
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Later Life Farming: Creating a
Retirement Paycheck
• 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)
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Implications for Extension Educators
• Avoid overuse of the word “retirement” in marketing
financial education programs to farm households
• Focus on their need to create regular cash flow and
find meaningful pursuits in later life
• A unique challenge is how to create retirement cash
flow when farmers’ primary asset, land, is illiquid and
they have no plans to sell it
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Tax-Deferred Investing
• Explain to farmers that they don’t have to fund retirement
accounts for employees (e.g., SEPs) in “lean” years but,
then, they can’t fund their personal accounts either.
• Focus educational efforts on tax-deferred investments
that farmers can fund solely for themselves (e.g., IRAs).
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Family Conversations
• Encourage farmers to have a family conversation
about farm transfer and confront emotional issues, if
any, “before it’s too late.”
• See Purdue University Extension’s Web site Who Will
Get Grandpa’s Farm?
http://www.ces.purdue.edu/farmtransfer/
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Prepare for Retirement
• Explore ways to phase into retirement to gain the
flexibility and reduced workload.
• Strategies include:
– Gradual transfer to the next generation,
– Groom a non-family member to take over the farm,
– Downsize the farm operation,
– Seek alternative employment other than farming,
– Sell equipment and/or livestock.
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Teaching Methods for Extension Educators
• Farmers value the unbiased perspective of
Cooperative Extension.
• Partner with attorneys and others who understand
agriculture and business transfer issues is critical.
• Multiple teaching methods are necessary to appeal to
a variety of learning styles.
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Questions? Comments?
Experiences?
Dr. Robin Brumfield
Dr. Barbara O’Neill
Rutgers University
brumfield@aesop.rutgers.edu
oneill@aesop.rutgers.edu
Later Life Farming Web site address:
http://laterlifefarming.rutgers.edu/
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