Retirement planning by Dutch farmers: rationality or randomness?
Purpose - In self-directed retirement plans, farmers are responsible for selecting the types of risky investments toward which the funds in their retirement plan are allocated. Furthermore, farmers do not necessarily purchase sufficient annuities with their savings upon retirement. There is little empirical evidence on the level of income sought or obtained. The purpose of this study is to analyze the long-term investment behavior with respect to retirement planning. Design/methodology/approach - Two types of data were merged for the analysis: data from the Farm Accountancy Data Network (FADN) cross-sectional dataset, and subjective data collected by a questionnaire survey. A response rate of 39 percent was achieved enabling analysis of 440 farm records. By means of regression analysis, the impact of subjective elements, for example level of income sought, as well as farm structure and financial farm characteristics on income obtained at the time of retirement were revealed. Findings - By decomposing the underlying decision alternatives, it was shown that the long-term investment behavior differed substantially among farmers, but the alternative decisions made were hardly affected by structural and objective parameters. The current study reveals the dilemma faced by any farmer who has the option to invest in his own business. Off-farm retirement investments simply provide an alternative destination for investible funds and it is a rational decision to invest these funds in their own business, thus making the farm itself their retirement “nest-egg”. However, a discrepancy between the level of income sought and obtained was found. Research limitations/implications - There is a need to study how farmers can be encouraged to use existing options for obtaining a more comprehensive retirement plan. Practical implications - In the investigated case, farmers are entitled like all residents to receive retirement benefits provided by the state, referred to as state pension. The use of three alternative retirement plans complementing the state-sponsored retirement benefits is investigated. Perceptions about whether or not the state pension was sufficient to rely on as the sole source of income did not affect participation in a retirement plan. This stresses the importance that the contributions made and assets reserved should be regularly evaluated and reviewed (via, for example, extension or internet tools) to ensure that the available capital will meet the future income sought. Originality/value - It is a challenge to identify the adequacy to attain retirement readiness by self-directed investment plans. The strategic choices to be made are complex, while the outcome is risky. In the current study, the long-term investment behavior with respect to retirement planning is analyzed by decomposing the underlying decision alternatives.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 70 (2010)
Issue (Month): 3 (November)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://emeraldgrouppublishing.com/products/journals/journals.htm?id=afr Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ashok Mishra & Hisham El-Osta, 2008. "Effect of agricultural policy on succession decisions of farm households," Review of Economics of the Household, Springer, vol. 6(3), pages 285-307, September.
- Marcel A.P.M. van Asseldonk & Miranda P.M. Meuwissen & Ruud B.M. Huirne, 2002. "Belief in Disaster Relief and the Demand for a Public-Private Insurance Program," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 196-207.
- Ganderton, Philip T. & Brookshire, David S. & McKee, Michael & Stewart, Steve & Thurston, Hale, 2000.
"Buying Insurance for Disaster-Type Risks: Experimental Evidence,"
Journal of Risk and Uncertainty,
Springer, vol. 20(3), pages 271-289, May.
- Philip Ganderton & David Brookshire & Michael McKee & Steve Stewart & Hale Thurston, 2000. "Buying Insurance for Disaster-Type Risks: Experimental Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 271-289, May.
- Novak, James L. & Gentle, Paul F. & Duffy, Patricia A. & Keefe, Alison M., 2005. "Farmers and Social Security Reform," Choices, Agricultural and Applied Economics Association, vol. 20(2).
- Ayal Kimhi & Ramon Lopez, 1999. "A Note on Farmers' Retirement and Succession Considerations: Evidence from a Household Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 154-162.
- Bruce J. Sherrick & Peter J. Barry & Paul N. Ellinger & Gary D. Schnitkey, 2004. "Factors Influencing Farmers' Crop Insurance Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 103-114.
- Minna Väre, 2006. "Spousal Effect and Timing of Retirement," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(1), pages 65-80, 03. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eme:afrpps:v:70:y:2010:i:3:p:365-376. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.