Older Farm Households More Likely To Have Retirement Accounts, but Level of Retirement Savings Lower Than Average U.S. Household

Farmers face unique circumstances in saving for and maintaining income during retirement compared with other U.S. residents. As business owners, their annual incomes fluctuate depending on market and weather situations, and they may have limited access to employer-sponsored retirement savings plans. However, the majority of farm households include members with off-farm employment, which may provide more stable income and access to retirement benefits.

Researchers with USDA, Economic Research Service used data from Agricultural Resource Management Surveys from 2018 to 2022 to assess retirement preparedness among U.S. farmers and ranchers. They found that median farm household income was higher than the median income of U.S. households in that period. They also found a greater share of farm households (61 percent) maintained savings in retirement accounts (including 401(k), 403(b), individual retirement accounts, and Keogh accounts) than U.S. households overall (54 percent) and nonfarm self-employed households (52 percent). When researchers narrowed their focus to farmers and ranchers at retirement age, they found that in 2021 around 45 percent of principal operators were 65 years old or older. Among this population, 57 percent held assets in retirement accounts, which is a higher proportion than the 47 percent of older U.S. households generally but lower than the 59 percent of older nonfarm self-employed U.S. households. The findings point to differences in retirement savings across different household types but also suggest that older farm households were less likely than younger farm households to have retirement savings.

Even though older farm households were more likely to have retirement accounts than the general population, they had lower levels of retirement savings. On average, older farm households had $247,600 in retirement savings compared with $260,900 for older U.S. households and $516,800 for older nonfarm self-employed households. However, farm households had higher levels of total assets than the average U.S. household, although some of their assets may be more difficult to access during retirement. Much of their wealth was concentrated in their farm operations, and tax implications for principal operators could affect whether farm households decide to draw on farm assets during retirement.