Retirement Savings Advice

November 23, 2016 12:00 PM

These planning considerations can add cushion for your future

Bad news: Only 48% of Americans say they’ll have enough money for retirement, according to a Gallup poll conducted earlier this year. Some farmers might feel immune to these worries because they have financial options, such as renting out land, that most do not.

Yet investment adviser Dan Carter warns this approach can be risky. 

“It’s exactly like putting all of your eggs in one basket,” Carter says.

Fortunately, there are some easy ways to diversify, he says. The first is simply to pay yourself a better salary. Farmers who pay themselves out of the operation but lowball their own salary for tax purposes aren’t putting much toward Social Security. 

Also consider setting up 401(k) or self-employed plan (SEP) accounts.

“That’s one good way to pad your nest egg,” Carter says. You can also pursue off-farm employment to diversify income streams.


Expect The Unexpected. Proper retirement planning is about asking the right questions and preparing for potentially disruptive events. Two of the biggest retirement disruptions are long-term illnesses and the death of a spouse. Everyone planning for retirement should think through answers to questions such as:

  • Is there a plan in place for my long-term care?
  • Do I have enough life insurance to cover my mortgage?
  • Do I have proper powers of attorney set up?
  • Do my 401(k) and other investments have assigned beneficiaries?

“We don’t want to think about it, but we need to think about it,” Carter points out.

You can also work longer to improve the odds of a better retirement, Carter says. “For some people, this can be a solution that allows you to both save more and postpone spending your savings.”

In fact, working past retirement age might not be all that bad, says John Eikenberry, a financial planner.

“Some people say they keep working because they can’t afford to retire,” Eikenberry says. “Some people don’t want to retire because they love what they do.”

Extend Your Career. There can be three big benefits of working longer, Eikenberry says. First is relief from financial stress. Delaying retirement can also be a plus for a person’s physical and mental fitness.

“Talk to people in their 50s and 60s, and you’ll see that [dementia and similar diseases] scare us,” Eikenberry says. “Work gives us the ability to keep our minds active.”

There are also benefits to waiting until full retirement age to draw Social Security. Just because you can draw benefits as early as age 62, he says, doesn’t make it the right decision because those who make that choice have earning limits set at $15,720 per year. For every $2 earned above that amount, $1 is deducted from your Social Security.

Compare that to waiting until full retirement age, Eikenberry says. At that point, $1 is deducted for every $3 earned above a certain limit (in 2016, the amount stood at $41,880). Those additional benefits add up.

Don’t make assumptions or leave anything to chance when it comes to retirement, Eikenberry and Carter agree. An ounce of planning can go a long way toward a happy and financially stable post-career life. 

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