Land Values Alone Cannot Fund Retirement

To me, the most surprising part of this month’s FCC report on land values is that people are surprised. We have been talking about this for years – previous double digit increases year over year are not sustainable every single year. The average growth across our province of 4.4 per cent is more aligned to where the baseline of sustainable farming land growth should be. Of course this growth will always vary a few percentage points based on your region, similar to our urban housing markets. But over the long term, double digit growth on land values annually is not sustainable and not likely. I write about this report because for many of the farmers we meet across the province they are grappling with the same issues when retirement is around the corner; the expectation that based on their land value, a certain dollar figure will fund their retirement lifestyle from their successor. The challenge is without proper financial planning, there is not a lot of money in the bank for these successors to fund their parent’s retirement. Financial literacy and planning needs to be a key part of both generation one and generation two. The rising costs of farm land values over the years has made it more challenging for the average young person to begin a career as a farmer. Planning for both succession, and funded retirement, needs to be a core part of any farmer’s management plan moving forward. – DW