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The Tough Retirement Challenges of Rural Americans

The 3 big barriers to retirement security that they face

By Chris Farrell

Planning for, and financing, the retirement years isn’t easy — even before the economic and market turmoil from the spread of the coronavirus. But financing a secure retirement is even harder in large parts of rural America.

Rural Farmer
Credit: Adobe

Rural families, on average, earn 25% less than their urban peers. They’re also less likely to be covered by an employer-sponsored pension or retirement savings plan, so, they have less in retirement savings.

The problem is especially dire in sparsely populated counties dominated by farmers, ranch operators and their workers.

Many rural counties have lost population since 2000, while small-town counties and metropolitan counties have gained residents, according to the U.S. Department of Agriculture. What’s more, rural populations are more likely to be older and disabled than urban ones.

"Farmers have a significant asset base, but it doesn’t lend itself to retirement income."

Yet the challenges of rural retirement are often ignored by policymakers and media.

Recently, though, I attended a panel discussing them: “The Importance of Pensions in Rural and Small Town America.” It was part of a conference held by the National Institute on Retirement Security think tank in Washington, D.C.

The 3 Retirement Hurdles for Rural Americans

That’s where Shannon Ferrell, a professor in the department of agricultural economics at Oklahoma State University, talked about three hurdles handicapping rural residents in planning for retirement:

1. Many live in “banking deserts.” The Federal Reserve Bank of St. Louis in 2017 found that there were almost twice as many bank deserts (no banks within 10 miles) in rural parts of America than in urban areas. The Fed study also cited prospects for an additional 851 potential deserts in rural areas.

Why does it matter whether there are bank branches nearby? Inconvenient access to banks is one barrier to getting financial advice and retirement services.

2. Poor broadband services. For many of us, it’s easy to do our banking and investing online with financial services firms. But large parts of rural America still have sketchy broadband access. Adults living in rural areas were more likely to say getting access to high-speed internet is a major problem in their community, according to a 2018 Pew Research survey.


3. The lack of employer-sponsored retirement plans. “Old McDonald may have a 4020, but he’s less likely to have a 401(k),” Ferrell said. That line brought laughs from folks in the audience who knew that a 4020 is a famous John Deere tractor.

Farmers are often asset rich, but they don’t have much income, especially in recent years with farm income on the decline. And since farmers are often self-employed, with an average of four employees, it often isn’t economic for them to offer a 401(k). Farms often only generate enough cash flow to support only one family.

Little wonder farmers don’t retire. According to the Department of Agriculture’s 2017 census, 21% of farm producers are 65 to 74 and almost 12% are 75 or older.

“Farmers have a significant asset base, but it doesn’t lend itself to retirement income,” said Ferrell.

Public Pensions in Rural America

The conference also introduced a new National Institute for Retirement Research study, Fortifying Main Street: The Economic Benefit of Public Pension Dollars in Small Towns and Rural America. The report emphasizes how important public pension dollars are to rural areas. In fact, the researchers said, public pensions are one of the few available incentives to attract and keep public workers in rural communities. In much of rural America, the largest employers are public entities, such as a school district.

The retirement story of rural America is really part of a much bigger problem. In a sense, it’s another canary in the retirement savings coal mine.

There are simply too many holes and gaps in America’s retirement savings system. Some 40% of workers still lack access to an employer-sponsored retirement savings plan. Employees at workplaces with retirement savings plans often can’t afford to fully fund them. Some 10% of multi employer pensions — think Teamsters and United Mine Workers — are in financial straits. Public pensions are struggling in several states, while private pensions have largely disappeared.

The bottom line is there is too much economic insecurity in retirement. Sadly, the coming economic downturn will only exacerbate the problem.

Photograph of Chris Farrell
Chris Farrell is senior economics contributor for American Public Media's Marketplace. An award-winning journalist, he is author of the books "Purpose and a Paycheck:  Finding Meaning, Money and Happiness in the Second Half of Life" and "Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community and the Good Life." Read More
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