Never Too Early to Plan for Retirement, Part 2

In part 1 of this 2-part series, John Barnard, a certified public accountant who has worked extensively with the agricultural community, shared helpful tips in planning for retirement. Among the most important advice: sooner is better. If you are in your 20s, you will have more time to save and build wealth than you would if you wait until your 50s, often a time when many people think about retirement needs.

No matter your age, John offers these additional considerations to help you stay on track.

  • Make it a priority to review your plan annually. Take time to sit down with your team – CPA, investment advisor, banker or lender, insurance agent – every year or two to assess whether your plan is working for you.
  • Life events or economic events necessitate a financial plan review. If you were single when you set up your plan and now you’re married, you need to make sure your plan meets your current needs.  If you were married when you set up your plan, but you now have a child, that’s a life event that may require a change in your plan. If your grandmother passes away and leaves you a large sum of money, that may require revising your plan. Major changes in the economy, either a downturn or the market going up dramatically, can be important times to look at whether you are invested securely enough to accomplish your goals. Or are you too secure and missing out on high growth opportunities? Any time there are those types of changes, whether that’s twice a year, twice a month, or twice a decade, it’s time to take a look at your plan.
  • Reassess your risk tolerance during annual check-ins or during life or economic event reviews. Often your financial planner will help you assess your risk tolerance, which is something that can change depending on your age and circumstances. If you are 20 and there is a dip in the market you have longer to recoup your loss than if you are 50. Not only can age contribute to your risk tolerance, so can a major life or economic event.
  • Make succession planning or an exit strategy part of your retirement plan. One of the most complex aspects to any retirement plan for many farmers is how to plan for the future when it comes to what to do with a farm and how to treat children fairly. The best time to think about a succession plan? Early and often.
  • Talk with advisors about helpful tools for both planned and unforeseen events. Succession plans are important and so, too, are ways to fund them. This is where it’s especially important to talk with your team about tools, such as life insurance or even long-term care. What if you become injured and need care? No one likes to think about that but it’s important to consider.
  • Crucial conversations. In his role as CPA for numerous families over the course of 40 years, John has spent time with left behind family members. He says it makes a huge difference if their parents had talked with them about the farm operation and had conversations about the expectations of both the parents and the children. Ask your children what they want; don’t just assume you know. Those conversations often contribute to the success of the operation moving forward as opposed to the children who find out after the fact about what their parents wanted and are taken by surprise. It may not be necessary to talk about every detail but a general direction can be helpful.
  • Pulling it all together. Every aspect of a retirement plan – your team of a CPA, banker or lender, insurance agent, and investment advisor; your crucial conversations with family members about the future; your investments and insurance – all help lead you in the direction to help you handle your current situation and prepare for long-term arrangements. That includes considerations in the event something unexpected happens to you prematurely and what you need to have in place when you’re ready to transition into retirement.

Whether you’re just getting started or need to review your plan, ask your Farm Credit lender about resources that may be helpful to you.

In part 1 of “Never Too Early to Plan for Retirement” John Barnard, owner of John M. Barnard, CPA, PA, a certified public accounting firm in Statesville, and one of two appointed directors on the Carolina Farm Credit Board of Directors, shares helpful tips for getting started and staying on track with retirement planning.

By Leah Chester-Davis