Despite countless words printed on magazine pages and delivered from conference lecterns, carefully crafted farm transition plans are often frozen by the inability of the older generation to let go. What is Dad’s problem?
One obvious hang-up is the shrinking pie. Multi-generation farms might have reached an income level sufficient to support multiple families during the past few years, but collapsing margins have made the shares of farm income less generous. Depending on the expectations that were in place when the farm welcomed the younger generation home, a stark choice faces families: either allocate smaller or fewer pieces.
A Changed Landscape. Years ago, it was easy for me to side with the oncoming generation. Older farmers should strive to keep successors on the farm, I reasoned. Although I am still inclined to embrace this strategy, I must admit it frequently has failed. With selfless sacrifices during income crunches, parents often risked and lost all. Memories of such events linger with survivors and resonate today.
Farmers at retirement age today are likely in better health than their parents were at the same age, even as much of their work is less strenuous. Popular videos of children driving big machinery might illustrate a questionable safety practice, but they certainly reinforce how little effort is needed. If 8 is old enough, why not 80? The disability-weariness motivation is much diminished.
The economics of retirement are getting trickier. Baby Boomers across America are taking sobering meetings with financial advisers or their own spreadsheets. Those conservative returns we plugged into our retirement planners have proven wildly optimistic. Bluntly put, we either need to live more cheaply or more briefly to make the money work out.
If, like most farmers, our investments are mostly in land, we face the heartbreaking need to saddle the oncoming generation with steeper rents than both hoped.
Many of us have developed interests other than farming, but we also have hints of what happens when a hobby becomes a job. “Two-beers-later” conversations with slightly older peers can yield unsettling comments about loss of purpose and empty hours on the other side of quitting. The future can resemble an endless February with occasionally warmer weather. We have made working the ultimate virtue, so retirement borders on vice. Nor are farmers in an environment that makes most alternative activities convenient.
Obstacles Aplenty. Now add in the load of uncertainty for retirees in 2017. Both Medicare and Social Security could be cut, especially for those with modest outside means of support. Although proposed cuts will hassle current retirees, they will be game-changing for those approaching retirement. This ambiguous future can make hanging on the safest choice. Meanwhile, inflation in health care continues to outpace inflation in all other sectors except for higher education, even as health care becomes retirees’ largest expense.
There can be unique ag impediments to retirement, as well. Handing off rented acres to successors can be complicated, especially if a personal relationship with the owner is the core attachment. Owners often wait for tenants to retire in a gracious concession before switching operators. Loyalty is hard to transplant in the increasingly transparent rental marketplace.
All of these problems are amplified by something we rarely mention: fear. Simply put, we often become more fearful with age. With a shortened time-horizon for recovery, we abhor uncertainty. Diminishing abilities, alarming personal experiences with vulnerability, sad outcomes for peers and an unpredictable safety net alter our risk tolerance and decision-making habits. Not changing anything is the default option, so the ultimate decision is transferred to outside forces.
Sometimes Dad won’t quit because he’s afraid of what happens next. That makes the future problematic to discuss, and 2017 doesn’t look reassuring.