Most farmers want their land to stay in agriculture, but very few have plans in place that dictate how the land, business and other assets will be divided among their heirs.

Over 30% of farmers in New England have reached retirement age. The majority of this population has not named a successor. Without careful retirement and transition planning, these farmers and farms can both be at risk.

Mike Ghia is the Vermont field agent for Land for Good, a nonprofit organization dedicated to helping farmers, landowners and communities navigate the complex challenges of land access, tenure and transfer. For 16 years, Ghia has consulted with farm families on farm transition planning.

He said that the worst thing that most farmers he’s talked with have done to plan for retirement is … nothing.

“I want to make sure that people aren’t just thinking about this when they’re close to retirement,” he said. “Planning for both retirement and farm transfers become much easier the earlier you start.”

Ghia advised farm operators to ask themselves a few important questions.

  1. Do you even plan to retire?

“The answers I get run the full gamut,” Ghia said. “On one end of the spectrum, some people never expect to retire. They tell me that they expect to die on the tractor. At the other end I’ve seen farmers who want to retire completely, walk away from all of it and never look back.”

If retirement isn’t something a farmer is interested in, then they can shift their focus toward the bequeathment of their assets.

  1. What does retirement look like to you?

Does it mean fully stepping away from the business or some sort of half measure or hybrid situation? “I work with a lot of farmers who would like to continue to work, but at some point want to slow down. I can’t tell you how many dairy farmers say to me ‘When I get to 65 I just don’t want to be in charge of a herd of cows anymore.’ They want to do their work but they’d rather someone else be in charge,” Ghia said.

Farmers may want to consider bringing on their successor early for management purposes while continuing to labor as they always have.

  1. How does Social Security fit into your retirement plans?

Social Security benefit amounts are based on a worker’s top 35 years of income. “Many, many farmers hurt themselves with Social Security when they do not report a profit on Schedule F,” Ghia said. Schedule F computes the net farming profit or loss that is reported on the designated line of your 1040.

“If you report that your farm is operating at a loss on your Schedule F, you are lowering your future Social Security payments,” he noted.

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by Enrico Villamaino