Funding the future: Discussing retirement in transition planning
By Top Crop Manager
For many current owners, succession planning is synonymous with retirement planning. The Ag Succession Survey looked into how farm owners are expecting to fund their future.
Current owners expect to fund their retirement in a mix of ways: 45 per cent plan to use public pension plans, 33 per cent plan to use funds from the sale of the farm, and 32 per cent of owners plan to receive a stipend/dividends from the new farm owner.
While current owners have an idea of how they plan to fund their retirement, one question lurked in the background without much discussion. When it comes to whether or not it was discussed how many generations the farm is expected to pay wages to, only 21 per cent respondents have discussed the topic. A larger majority of respondents (56 per cent) have not discussed how many generations the farm is expected to pay wages to. For 23 per cent of respondents, the topic is not applicable to their situation.
However, the topic of how the current owner’s retirement plans will affect the farm is more widely discussed. There is an even split, with 40 per cent of respondents discussing the how retirement will affect the farm, and 40 per cent not discussing the effects at all.
These results mirror answers from survey questions that sought to find out if succession planning is being discussed. Not having a succession plan in place is a barrier to discussing transition on the farm for 26 per cent of current owners and 30 per cent of prospective owners. The large number of respondents (40 per cent) who aren’t discussing how retirement plans affect the farm could be a by-product of the lack of transition discussions in the first place.
While a succession plan is still uncommon, a retirement plan is not. Sixty-nine per cent of survey respondents answered yes when asked if the farm’s current owner has a plan in place to fund retirement. A smaller group (24 per cent) know the owner does not currently have a retirement plan. Seven per cent of respondents are unsure if the current owner has a plan or not.
When it comes to prospective owners, or those who don’t currently own the farm, most (17 per cent) have a plan for their own retirement, but some (12 per cent) do not.