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(ARA) - While our nation’s leaders fill the airwaves and newspapers with ideas and sound bites about Social Security to private savings accounts, one important part of the retirement debate crucial to rural communities is being overlooked. Americans have an ever-growing need to better manage their retirement savings so that they can last a lifetime. Addressing this issue head on is one of the most fundamental ways that we can achieve true retirement security. With an estimated 77 million baby boomers soon to retire, life spans getting longer and fewer retirees participating in employer-sponsored retirement plans, many Americans will have a difficult time maintaining their current standard of living in retirement. Providing retirement income for a lifetime has long been a tenet of the American retirement system, but currently Social Security only replaces an average of 42 percent of pre-retirement earnings. It is clear that helping the incoming retiree boom manage their savings for life is a challenge that must be addressed.
Farmers and farm workers face an even tougher road to retirement. A wide array of risks directly affects not only their incomes, but also their future financial well-being: unpredictable weather, disease outbreaks, global competition, trade wars, farm consolidation and shifts in national farm policies can affect their financial condition - and consequently their savings and retirement plans.
In addition, farmers are largely self-employed and are typically not covered by traditional employer-provided pensions. According to the Census Bureau, about 30 percent of agricultural workers have access to employer provided retirement plans, as compared to 60 percent of all other workers. With Social Security replacing less and less of pre-retirement income, it’s truly up to individuals to manage their retirement savings.
Many organizations are teaming up to find answers to this complex issue. One solution that must be part of the debate in the halls of Congress is providing incentives for Americans to invest in retirement vehicles - such as life annuities - that convert savings and assets into income that cannot be outlived.
The Retirement Security for Life Act would provide incentives to help Americans secure a steady stream of income in retirement - creating that “paycheck for life” for themselves. With bipartisan support in both houses of Congress, the bill offers a tax incentive to encourage Americans to invest some of their retirement savings in lifetime annuities by providing a 50 percent tax deduction on up to $20,000 of income from an annuity per year. For a typical American in the 25 percent tax bracket, this would provide an annual tax savings of up to $5,000.
This legislation is aimed at helping all Americans - regardless of their circumstances - have a chance to retire with peace of mind, but it is more important to those who work in agriculture. According to the USDA, the amount of non-farm net worth has increased significantly in the last decade. This still leaves the challenge of converting non-farm assets (including the proceeds from selling their farm, equipment, etc.) into a stream of income that will last throughout retirement.
The American Corn Growers Association has joined together with other farm and agriculture groups including the American Agriculture Movement, American Agri-women, National Association of Farmer Elected Committees, Oklahoma Farmers Union, Soybean Producers of America, and Women Involved in Farm Economics as part of Americans for Secure Retirement to encourage Congress to provide our communities with the tools they need to create retirement income that will span from the first day of retirement to the last.
As the debate moves forward, you can expect both political parties to disagree heartily, but one issue on which they can join together is the effort to ensure that all Americans have the opportunity to maintain a sufficient standard of living in retirement.
Courtesy of ARA Content
