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Frequent Contributor

I'm back..........I posted a few months ago when it was really cold and Kay was saying it was almost 32!.   We were glad at that time to get above zero.   What a winter it was.  Glad it's gone as of today!

 

My husband and I operate a dairy farm in WI and are getting to the point of trying to exit.   Our kids do not want to farm, and I can't see as I blame them.  So that's whats been on our minds these days.   Lots of things to think about.   Rent out the land?   Sell the land?   Sell the land and the buildings?   Sell the cows privately or through an auction?    It all makes our heads spin.

 

Then I wonder what we'll do in retirement since we've been harnessed to the farm for 30 years with only one real vacation back in 1996.  I'm almost embarrassed to admit that but it's true.   I've been on vacations separately but my husband hasn't been off the farm in almost 20 years for more than one or two nights. 

 

We have been blessed with good health but for how long.....we want to travel and hope we are able to once the cows are gone.  We have 1.5 employees but they can't handle things when we're gone as they don't know how to run the machinery.

 

I also work off the farm part-time in an office.  Haven't really thought about when to retire from there but not before I turn 65 (for health ins reasons).

 

I'm going to take a walk now with our daughter because it's gorgeous outside.....it won't be this nice again for awhile.   Then it's sit in front of the tube to watch March Madness!   Rooting for teams in my bracket.....WI of course, and VA and Duke (don't really like them but they'll probably go far) and of course KY can keep winning till they lose to WI.  LOL.  Last year our 3 sons went to Dallas for the Final Four.   Maybe they can go to Indy this year?

 

 

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Honored Advisor

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Well, I am glad you made it back! Exit strategies are complicated things, aren't thry. Linda and her husband went from dairying to beef cattle a couple years back...probably your best guide on here, as to how to handle all of that.

Just one quick question...have you checked on our retirement age? We are pretty much "notch babies", so 65 may not make you old enough to retire...?
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Isn't 65 just a number? We don't plan on living on social security.
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Glad to have you back. This is a good place to get advice.

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Yes and no. We don't pln on " living on" Social Security, either, much because we were always hearing how it would go " broke" by the time we got there. We have built business interests that ought to keep earning.

If your planning centers around Medicare eligibility, here's the calculator:http://www.medicare.gov/eligibilitypremiumcalc/#.

Be advised that friends who have already reached retirement tell us the supplemental coverages you are required to buy still add up to quite a bit of expense monthly. I priced ours out a year or so back (what they would have cost if we had been eligible then), and it was a $350-400 per month expense for the two of us. If you have bern working " for the insurance", I just wanted you to factor that into your retirement planning.

The whole " notch baby" thing is significant, as to when you reach " full retirement age". Those of us born in 1943-1954 are in that bunch, and can claim full retirement at 66. It goes up with each succeeding year. Your full retirement age is significant, because it is when you reach 100% of your benefts. Retiring before that ago reduces your monthly income from SS permanently, the earlier, then greater the reduction.

Most of us plan on returns from the land and farms we worked to buy and build, I think. We are looking at a rough ride in the farm economy again, for who knows how long? I am not making any assumptions...
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Yes, retiring a little early does reduce your income some but if you sit down & pencil it out, you have to live ? yrs. longer to make it up.  Your choice.  Health issues are often a surprise.

 

As for retiring from dairying.  Didn't miss it a lick last winter but spring, I get the itch.  We sold a couple heifers last night and will have one more trailer in May and then we are totally beef & bull calves.  My husband would have to be very very ill  not to have some livestock on this farm.  It keeps him going.  I will have to call the sale barn truck before the undertaker.   We thought about having someone cash rent our little 80 A. but after talking to others decided to keep the same neighbor doing the machine hire.

 

You might want to talk this over with your tax accountant.  A friend who is pretty well off planned on retiring completely from farming changed after the talk.  You can take more of your medical expenses off for instance.  Insurance, etc.  And there are always things not covered with medicare & insurance.  Some medications, especially new ones with no generics, can be very costly.  And your farm insurance too. 

 

There are other issues too but you might want to really research this with a professional before making the jump.  Beef is a pretty good fit for us as DH likes livestock and you're not tied down.

And it gets him out of my hair awhile.  LOL  I still am not used to him accompanying me to town when I go.  Alone time has it's advantages.

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Linda, your "alone time" remark has me trying to remember the sign I saw at the craft show last week..."Taking your husband shopping with you is like______________"

 

Can't remember the rest, but my friend and I saw it and both laughed out loud.  I feel so bad for her. 

 

She is a retired RN, whose husband worked out his last year as a consultant for his former employer, where he had a very powerful financial position.  They earned a LOT, and he has calculated exactly how longthey can live, before their "money runs out". 

 

She confided that they haven't even started tapping a million-dollar IRA, and have other investments.  Meanwhile, she's gone back to work - at 71, with a bad foot - so as not to hear that they are starving.  If they starve, the rest of us are goners!  He just cannot let go of THE "number."

 

I refuse to live that way.  We had next to nothing starting out, and have done okay.  Most of our net worth is in land and other hard assets, all debtfree.  I want it that way.  Money is so abstract to me. 

 

Just sitting and making out IRA and HSA checks.  The two are more than I made teaching school for ten months a year here.  That is just for our future. nothing for today. 

 

Totally agree that the farming gig is a good one, taxwise.  There are ways to "stay in " that require less of us as we age.  I am re-thinking some of our succession plan as I type. 

 

 

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DH can get Medicare in 26 months according to your link, Kay. Thanks for the link btw. I'm two years younger: We are currently paying $400 a month for health insurance that is mediocre. Medicare won't any any worse I don't think. Now not on any expensive drugs. Not much of any drugs really.

You bring up valid points about farming being a good gig tax wise. We have no pasture, all land is tillable so I don't know how the beef thing works without pasture. Know zero zilch nada about beef. Linda when you say you aren't tied down does that mean you can go away for a long weekend and have enough feed out there and no one needs to check on them? Do you have all steers or any beef cows? We can't rely on anyone to check anything here. Maybe DS but he's half hour away.
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And we're a couple years out yet for retirement . Not going to retire pre-65. Reason we're thinking about it is all we have for labor is 2 guys & neither speak English. They could leave at any time no warning. Just makes us real nervous. We are playing our cards close to our chest. We have been culling like crazy getting rid of all the dead wood. Sometimes pulling the trigger too soon. Cull cow prices are high now. How long will they stay that way? We got $2,000 each for 2 culls this week. Don't want to keep milking a bunch of cows and in 2 yrs they are worth half what they are now.
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We just bought thirty beef cows/heifers and our bull last year.  Had a mediocre calf crop out of the bred stuff.  Really looking forward to our own boy's calves. 

 

Paid way too much for the females, given how the calf crop materialized.  Hard winter, had to buy lots of hay, and grass is slow breaking out.  Mike is checking fence today, making it hot, hoping to run them over this afternoon to ryegrass. 

 

Calving season will be a several-times-daily checking chore, but cows that have calves beside them mostly need a walkthrough, to look for any problems.  Mike does it daily.  We are planning a move for the main herd to VA farm this spring, at weaning.  Want to do weed management that the grazing tenant failed to do first. 

 

I think you can count on cattle prices "normalizing" in  few years, but cattle take two years to a calf crop, so numbers that are at seventy-year lows cannot rebound overnight. 

 

There are other ways to stay in farming, even if just as a partner on your acres.  You have to have some risk to the potential losses of the  operation to gain that status, I think.  Again, talk to a good consultant, accountant, etc. 

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