Filing for Social Security before full retirement age means active farmland management can trigger the earnings test, withholding $1 in benefits per $2 earned above $24,480. Fixed cash rent keeps income classified as passive and exempt from the earnings test, but crop-share arrangements with hands-on management convert income to self-employment earnings. Farmland REIT distributions count as investment income, fully bypassing the Social Security earnings test, though investors own shares rather than direct land.
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Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today. A 64-year-old walks into retirement with $300,000 earmarked for a real asset.
He buys farmland, leases it to a local operator, and expects rent checks to arrive while he enjoys retirement. He already filed for Social Security at 62 and assumes land is land and rent is rent. Social Security does not see it that simply.
If he collects fixed cash rent and stays out of the operation, the income generally remains outside the retirement earnings test. If he takes part of the harvest and helps manage production, the same land can begin generating self-employment income. From the road, nothing changed.
On his tax return, his investment started looking like a job. Before full retirement age (FRA), Social Security applies the retirement earnings test to wages and net self-employment income. Investment income and ordinary rental income do not count.
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