Expensive old age.(FYI)(financially dependent retirees)(Brief Article)

Top Producer, February, 2003

One of the significant cash squeezes in agriculture is coming from long-living retirees who are financially dependent on the operation, says Dave Kohl, University of Virginia Tech at Blacksburg, Va. "The question to ask those in your business who are nearing retirement is not when they will retire, but when they will be financially independent of the business," he says. "Otherwise, you risk draining the farm to support [older family members]."

You can plan for this by stashing cash outside the farm. "At least 50% of a retired operator's income has to come from nonfarm sources," recommends Kohl.

Operations that once counted on supporting farmers for five to seven years after retirement might now have to figure on 20 years, he adds.