Several years ago as we prepared to transition from sprawling urban life to our rural farmstead, my wife and I were filled with excitement about growing our own food and being immersed in nature. Yet, during that period of intense change and learning we also spent many hours discussing, of all things, retirement.
At the time the idea of retirement was many years away for us, but in our “former” lives we at least understood what the plan was, so we rarely thought about it. The plan then was simply to keep working until we were 62 or so and then let a 401K or pension plan fund the rest of our life, perhaps with a little help from social security.
Moving to a farm setting means that there may be no pension plan and for many people it means converting a 401K or other savings into hard assets such as land. Then, just after we moved to the farm the “great recession” of 2008 hit. We witnessed the economic hardship forced onto so many people as a result of reckless lending and investments by major lending institutions and equally reckless government spending, which required government bail-outs and central banks intervention to prop up global markets.
After that experience, our confidence that pension fund obligations would ever be met had eroded anyway, so we began to consider thinking of retirement planning, and homesteading, in a new way.
And we are not alone in thinking this way.
Homesteading as a Retirement Plan
Consider Guy McDowell, who wrote a post that he titled Preparedness as a Retirement Plan. With Guy’s permission and in his own words, here is the article in its entirety.
“The concept of retirement is a relatively new one. Not so long ago, when we were a more agrarian based society, few people ever retired. Their daily duties just changed. As we grew older we would take over running the farm, and then we would maybe step back and let our kids do that. Maybe we would take over maintenance of the equipment or something a little less physically demanding, but that required our experience. Maybe we would help out more inside the home. But flat-out retirement to travel south or play golf all day was the domain of the ultra rich. Even then, most tycoons were still wheeling and dealing well into their 60s and beyond.
Nowadays with retirement plans tanking and pension funds bleeding out, we may find ourselves without the ability to retire once again. However, this time, we will not have the farm to feed us and the multi-generational home to keep us occupied and close to our loved ones. If we are very fortunate we may be able to find a spot in a retirement home and sell our current homes to pay for it.
Me, I have a different plan. My plan depends on me getting prepared to take care of myself and my wife for as long as we are physically able. If my plan works we will also be able to ‘retire’ early. That plan is preparedness.
When you think about it if you can provide most of your own food, utilities, and medicine and your shelter is bought and paid for, how much money do you really need? Enough to pay the property taxes, run your vehicle, and take care of emergencies. Maybe you need some money for a bit of travel as well. But not as much money as two people working for more than 40 hours a week each generate.
It is not hard to imagine a household income of around $100,000 a year or about $73,000 after taxes. Now, we know a lot of people are going to have mortgage payments around $1400 a month, utilities of at least $400 a month, TV and Internet for another $200 a month, $500 for food, $400 for various insurances, $200 for gas for the vehicles…it goes on and on.
So just the cost of living consumes $3100 of your after-tax income. Yearly, that is about half of your income. If you can pay off your home, produce half of your utilities, drop the fancy TV package and step down a notch on the Internet access and produce half of your food, you cut that outlay to about $1100 dollars a month. At that point, one of you can effectively retire. Or, the two of you can work half as much.
So what do you do with the extra 20-30 hours a week? Do the soul-building things like work your garden, love your spouse, split some wood, read books, start a business, whatever! Now, you are working for you. And should everything go for a poop, you will be completely prepared to live comfortably and well with little to no income.
I find the thought of retiring to my homestead around the age of 50 to be a much more motivating and positive thought than thinking of prepping to cope with disaster or the “End of the World” like stereotypical survivalists talk about. Disaster may never come, but time always marches on, and sooner or later we all need to slow down.”
I agree with Guy’s thinking. In fact, we have found the life he envisages for his future closely resembles the life we chose. Of course, we were not leading this life a decade ago when we lived “normal” lives on a small lot in suburbia, homeowner’s association and all. I often found myself worrying about what would happen as we aged, which is why we took purposeful steps to increase our independence and self-reliance. As I shared in
As I shared in The Accidental Farmers I do not think we knew precisely why we were going to the country when we went… we just knew something was not right in the world we were living in. Our goal was simply to begin producing more of what we needed and consuming more of what we were offered, and that transition made good financial sense. After all, consumption costs money whereas production can save or even earn money.
But we didn’t get here by accident. We changed our path. As Jim Rohn stated, “Life doesn’t get better by chance, it gets better by change.”
Another thing I have learned is this: I do not believe someone needs a lot of money to feel “well off.”
If they have a lot of money, great… I suppose, unless there is a severe financial crisis, which a growing number of people expect in the next decade. In that event, I suppose they will not be so well off after all.
On the other hand, if you have a spot of land on which you can raise purely pastured animals (sheep, cows, goats) you can produce more protein than you will need each year, and you can do so at ZERO cost if the animals only consume pasture. This is even truer if you have a pond and stock it with catfish, as we did, or have access to hunting ground for deer, rabbit, squirrel, etc., as we do. All “free” food for the taking and, unlike annual gardening, the food will replenish itself and require virtually zero maintenance.
Once you learn to tend a year-round garden, start seeds and save seeds, you will have no cost for seeds. You can trade the time you now spend fighting traffic, sitting in meetings or doing your job with planting, weeding, harvesting, hunting, processing, preserving and, most importantly, eating healthily! There will be plenty of “downtime” for pasture walks, reading, camping and enjoying life.
In my opinion:
It will not take much land for you to produce enough for yourself and to generate enough income to pay taxes, etc. How much income you need is up to you, but regardless of the answer, this book provides numerous ways you can financially achieve a self-sufficient lifestyle.
For instance, if you had 50 acres or more of pasture, you may enjoy watching a herd of 50 cows in retirement. The cows will likely produce one calf for you per year, which you may want and be able to sell after weaning for an average of $1,000, depending on market conditions. In recent years it’s been much more than that, but in some periods it’s less. In any event, your herd would spin off a cash flow stream for you annually without too much vigorous management on your part. To me, it’s a pleasurable retirement income path.
This is an increasingly popular notion put forth by many, including, Jacob Lund Fisker, author of Early Retirement Extreme: A Philosophical and Practical Guide to Financial Independence. Jacob also maintains an excellent blog you may want to visit.
Regardless of your current age, you can think of homesteading as a retirement plan, for what you are really doing is redefining “retirement.” Retirement does not mean not working; it means freedom to work as much (or as little) as you want. Some people want to work vigorously until their last day. I fear that I am in that camp.
Others may want to approach work as something more of a hobby. Either approach can be realized on a homestead as long as income and expenses are aligned. The strategies I put forth in How to Make Money Homesteading should prove helpful for achieving that.
Again, it is not as if you won’t need money, but if the goal is to have no mortgage, no utility bills (thanks to alternative energy), very low food costs thanks to gardens, orchards, milk cows and livestock, no car payments, etc., how much money will you actually require?
Whatever your answer to that question, the homestead rather than an employer or public pension plan can be relied upon for income and sustenance, allowing you to put faith in yourself rather than others.