Over the past two decades, farmland has quietly emerged as one of the most stable and profitable investments, consistently outperforming traditional asset classes such as stocks and bonds. For long-term investors, especially those thinking about retirement, farmland offers a unique combination of steady income, capital appreciation, and significant tax advantages. As the global demand for food continues to rise and farmland becomes scarcer, this asset class is increasingly being recognized as a smart and sustainable way to build wealth for the future.
With the passage of the 2024 U.S. Farm Bill, new tax incentives are making farmland an even more attractive option, especially for investors looking to use their self-directed IRAs to secure retirement income. Bob Waun, co-founder of DIRT Realty, is a strong advocate for smaller investors putting their money into farmland, emphasizing its potential as a retirement investment.
“Farmland is one of the most dependable ways to build long-term wealth,” says Waun. “More small investors should be using their self-directed IRA money to invest in land. It’s a tangible, essential asset with real income potential and excellent tax advantages.”
Farmland’s Consistent Growth Over the Last 20 Years
For the past two decades, farmland has delivered exceptional returns, driven by the consistent demand for agricultural products and the limited supply of arable land. According to the U.S. Department of Agriculture (USDA), the average value of U.S. farmland has increased by over 6% annually since 2000, more than doubling in value in many key regions. Farmland’s ability to generate stable, inflation-resistant income from crop production or leasing land to farmers has made it a powerful tool for wealth accumulation.
A report by NCREIF found that farmland investments have delivered an average annual return of 11.5% over the last 20 years, outperforming many traditional asset classes. This remarkable growth is fueled by rising global food demand, the increasing use of farmland for renewable energy, and the growing need for sustainable agriculture.
“Over the last two decades, farmland has not only been a safe investment—it’s been a highly profitable one,” says Waun. “As demand for food and agricultural products continues to rise, farmland values will keep growing, making it an ideal asset for long-term retirement planning.”
Using Farmland as a Retirement Investment
One of the biggest advantages of farmland is its ability to generate steady, passive income through leasing or agricultural production, making it a perfect fit for retirement portfolios. As investors approach retirement, they often seek assets that offer reliable income streams without the volatility of the stock market. Farmland’s ability to provide cash flow from agricultural rents or profits from crops makes it an attractive option for those looking to create a sustainable source of income during their retirement years.
Farmland also offers the potential for long-term capital appreciation, providing a valuable hedge against inflation. As the global population grows and urbanization reduces the availability of arable land, the value of farmland is expected to continue rising. According to TIAA, farmland values have increased by an average of 6% annually, making it one of the most consistent and inflation-resistant assets available for long-term investors.
“Farmland gives retirees the best of both worlds,” says Waun. “You get the steady income from leasing the land, plus the long-term appreciation that comes from owning a scarce, high-demand asset.”
Tax Incentives in the 2024 U.S. Farm Bill
The 2024 U.S. Farm Bill has introduced a series of tax incentives aimed at encouraging investment in agriculture and farmland. For investors using self-directed IRAs to purchase farmland, the bill provides additional tax benefits that make farmland an even more appealing option for retirement savings. These include tax deductions for sustainable farming practices, capital gains deferrals for reinvestments in agricultural properties, and tax credits for land conservation and renewable energy projects on farmland.
By using a self-directed IRA to invest in farmland, investors can take advantage of the significant tax-deferred or tax-free growth of their retirement accounts. Income generated from leasing the land or selling crops can be reinvested into the IRA without being subject to immediate taxes, allowing for compound growth over time. Additionally, farmland owners can benefit from the depreciation of the land, further reducing their taxable income.
“The tax incentives in the 2024 Farm Bill make farmland an even smarter choice for retirement investors,” Waun explains. “With the ability to defer taxes and take advantage of deductions, farmland can help maximize the growth of your retirement portfolio while providing real, tangible returns.”
Why More Small Investors Should Be Investing in Dirt
For too long, the benefits of farmland investment have been largely confined to institutional investors and large-scale farmers. However, with the growing availability of self-directed IRAs, more small investors are gaining access to farmland as a viable asset class for their retirement savings. Self-directed IRAs allow individuals to invest in alternative assets like farmland, providing greater control over their retirement portfolios and opening up new opportunities for diversification.
Waun believes that farmland offers small investors an opportunity to grow their retirement savings in a stable, inflation-resistant asset that has outperformed traditional investments for decades.
“Farmland is no longer just for big players,” says Waun. “With self-directed IRAs, more small investors can get a piece of the pie. It’s time for people to start thinking about land as part of their retirement strategy. It’s one of the safest, most dependable investments you can make.”
A Long-Term Solution for Retirement Security
As retirement planning becomes more complex in today’s economic environment, farmland offers a solid, low-risk investment option that can provide both income and growth. With the 2024 U.S. Farm Bill providing new tax advantages and self-directed IRAs making it easier for smaller investors to participate, farmland is becoming an increasingly attractive choice for those looking to secure their financial future.
For long-term investors seeking stability, passive income, and a hedge against inflation, farmland presents a compelling solution. With decades of consistent growth, increasing global demand, and new tax incentives, it’s one of the best options for building and protecting wealth in retirement.
“Farmland isn’t just a smart investment—it’s the kind of asset that can help you retire securely,” Waun concludes. “It’s time more people took advantage of the benefits that land ownership provides, especially now that it’s more accessible to small investors.”
As more people recognize the unique value that farmland brings to their retirement portfolios, its role as a cornerstone of long-term wealth-building is only set to grow. Whether you're looking for a steady income stream or long-term appreciation, farmland offers an ideal combination of both.
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