What’s Your Number? – Determining Your Income Needs When Exiting the Family Farm
As part of the farm and ranch succession planning process, one of the key decisions that must be reached is how much monthly/annual income the outgoing owners will need. There are many answers to the question of how the money will get to the owners. But before that can be addressed, it is necessary to know how much!
As with many of the tasks undertaken in succession planning, this too is simple, but not easy. It takes a bit of work. Especially if farm or ranch has been paying for personal expenses. While one size will not fit all, here are some areas to consider in determining your income needs in retirement:
Housing Costs
Mortgage Payment
Utilities
Maintenance
Insurance
Property Taxes
Household Expenses
Food
Supplies
Personal Items
Clothing
Cleaning
Transportation
Automobile Purchases
Maintenance and Repair
Fuel
Insurance
Health Insurance
Life Insurance
Long Term Care Insurance
Liability Insurance
Entertainment
Travel
Meals
Clubs
Charitable Contributions
Other Current Regular Expenses
Other Debt Repayment
As you can see, estimating your income needs in retirement looks a lot like creating a monthly or annual budget. The difference is you don’t know what the future holds. So, build in a little buffer, for inflation and the like. There is no way to know exactly what the future holds, but if you are going to make the transition is going to happen, some tough decisions will need to happen. This is one of those tough decisions. Getting help in arriving at “your number” from qualified professionals, like a financial planner or a farm transition coordinator can help.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.