Depending on your age, retirement may be barely a distant thought. For folks involved in agriculture, retirement is often an especially foreign concept. Certainly if you’re approaching that stage of your life, there is much worth considering.

Start by organizing your thoughts and asking yourself (and others) some questions. Here are some points to ponder before you walk away from the business world.

  • What are the transfer goals for your operation? We all have goals in life and each set is unique to an individual. All parties involved in the farming operation should sit down and list their individual, family and business goals.

    The next step would then be to rank and combine the goals from the parties involved into one set designed specifically for the pork operation. As the retiring individual you might have certain items that you want to distribute to certain people. Through this goal-making process you can bring your business partners and family together, and inform everyone of your wishes.

  • How much income will you (and your family) need during the retirement phase? A simple way to calculate this is to list your current expenses; then complete a second column with adjustments for which expenses will increase or decrease. This will determine the amount of income necessary for your retirement years.

    If there are new things that you would like to pursue, you need to investigate and outline costs associated with those ventures. 

  • How will you use farming assets to accomplish the transfer goals and to generate retirement income? When completing your balance sheet, determine which assets you will keep to generate retirement income. Often land is kept and rented out. This rental income, along with social security, livestock and equipment sales, and investments can generate your necessary retirement income. If you have sufficient assets heading into retirement, you may look at which ones you could possibly transfer to the succeeding generation or business partners through a sale or gift.
  • Is there sufficient income for you and others to make a living? This can be a tough question for many pork producers to answer. Often, there is not sufficient income for both the retiring and incoming families. This is where careful planning and analysis of different options can help the transfer plan succeed.

    Many farming operations are now subsidized by off-farm incomes. Taking a realistic look at the income needs of various parties involved can help determine how asset transfers can take place. Perhaps gifting is needed as start-up assistance or maybe a purchase is needed to provide income for the retiring owner. Renting equipment or contracting out livestock also can provide a flexible income option that could be adjusted according to the operation’s profitability.

    How retired do you want to be? When retiring from pork production you must determine how active you still want to be in the business. Will you be available to help with certain animal-realted chores? Are you willing to fill in occasionally for vacationing employees or at peak times, such as when field work is underway?

You must decide how much you are willing to contribute to the farming operation, even in retirement, so those stepping in to run the business can plan how to proceed.

    You will need to answer these and many other questions as you approach retirement. There is a series of 10 bulletins on “Transferring the Farm” and 10 more bulletins on “Estate Planning” that you can access on the University of Minnesota’s Center for Farm Financial Management Web site at www.cffm.umn.edu.

    These bulletins are a great place to start planning a successful transition into retirement. 

Editor’s note: David Bau is an agricultural business management educator with the University of Minnesota Extension Service Regional Center in Worthington, Minn.