A Good Farm Wife – Part 2
In the last column I discussed the elements of being a good farm wife based upon a question posed by one of the followers of this column. On this cold, blustery winter morning, let’s examine this subject further.
One of the areas farm women should be concerned with is off-farm investments. A frequent strategy used by farm families is investing everything back into the farm business and minimizing taxes by purchasing machinery and inputs in the month of December. While this may make sense in some cases, it leaves the farm spouse with all the eggs in one basket.
Females, on average, outlive males by seven years. One of the biggest fears in retirement is outliving your financial resources. First, I tell people who don’t invest outside the business, “Which of your children do you want to live with in retirement?” If that doesn’t get their attention, then I discuss that many Americans spend 18 to 25 years in retirement, requiring a $750,000-$1 million nest egg to maintain their current standard of living.
What about Social Security? A good farm wife shouldn’t be worried about paying some income taxes. That way some money can be counted upon from the government upon retirement. Granted, you can invest more wisely than the government, but a Social Security check provides a floor of income and a fallback in case of death of a spouse.
A good farm wife or business person should make every attempt to invest 5 percent of net income outside the business in stocks, bonds and mutual funds. What about all the scandals? Keep in mind that 97 percent of wealth accumulations occur because of diversification. The last thing you want when you are 75 years old is to have all your retirement income dependent upon land and farm asset rent or sale, particularly in a large, changing global environment.
Next time, we’ll discuss investment strategies and other questions that need to be raised.
Fertilizer and energy prices will rise another 10 percent because of the cold winter (enough about global warming!) and the higher than expected demand from China and South America.
My e-mail address is:[email protected] 
Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
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