Benefits May 6, 2005

Research Warns about Farmer Retirement Woes

May 6, 2005 (PLANSPONSOR.com) - America's farmers are particularly at risk for hitting their retirement years without enough money and being forced into a declining standard of living, according to a new report.
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The study, entitled Lifetime Income Crucial to Farmers’ Retirement Security , warns Congress that to provide farmers with a secure retirement, “the challenge goes far beyond Social Security” and that lawmakers should consider measures to help provide farmers a steady lifetime income by encouraging the use of annuities, a news release said.

One key assertion of the study, issued by the American Corn Growers Association (ACGA) and Americans for Secure Retirement (ASR), is that farm and ranch operators and their workers face significant and unique obstacles in planning and providing for their retirement. “With less access to employer-based pensions and volatile business risks, farmers often face a more difficult retirement path than the average American,” noted Larry Mitchell, CEO of the American Corn Growers Associations, in the news release.

According to the announcement, the study conclusions include that:

  • farmers are less likely to participate in employer-sponsored retirement plans, further limiting their sources of retirement income, with only a third of all American agricultural workers having access to a workplace retirement plan and less than a quarter actually participating in such plans.
  • farming, as a business, is far more volatile than most, making saving for retirement more difficult.
  • retirement creates a ripple effect in rural communities. Of the 386 counties in the US with persistent poverty, 340 of them are rural. Retired farmers and farm wives that outlive their savings only add to the demands that strained local governments are facing to provide health, transportation and other social services to the poor and elderly.
  • farm wives are particularly vulnerable to declining standards of living in retirement.

A bill introduced in Congress earlier this year called The Retirement Security for Life Act (HR 819, S 381) provides that taxpayers not pay federal taxes on one-half of the income generated by lifetime annuities, up to a maximum of $20,000 in excluded income per year (See Annuity Tax Break Bill Reemerges in New Congress ).

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