Grant Cardone, the outspoken real estate guru, is known for his shocking posts. He often is very vocal about his economic predictions and where he sees the economy headed. But this time, he touched on retirement savings. In a July 12 post on X, Cardone argued that the traditional $1 million retirement goal seriously falls short of what regular people need.
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Cardone wrote, "If you only have $1,000,000 & pull out 4% a year, that’s only $40,000 a year to live on & exhaust your retirement.” Cardone emphasized the looming financial challenges for retirees, warning that “Seniors will not be able to live on $4k a month in 2034.”
Instead of the conventional $1 million target, Cardone proposes a far higher goal of $5 million. When strategically invested in apartments, he suggests that this amount could generate a substantial monthly income without depleting the principal. As he puts it, “$5 million self-directed into apartments would allow retirees to get $20,000 a month and never touch the $5M.”
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But is Cardone’s claim about generating $20,000 monthly from a $5 million apartment investment realistic? While it’s certainly possible, it’s not without challenges. This strategy would require a well-managed portfolio of properties in strong rental markets.
Assuming a 5% annual return (which aligns with Cardone’s figures), an investor must find and maintain properties that consistently outperform average market returns. This isn’t impossible, especially for savvy real estate investors, but it does require significant expertise, active management, and a bit of luck. Cardone’s strategy could work for some, but it’s not a guaranteed path to retirement riches for everyone.
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While Cardone’s $5 million figure might seem high, recent studies suggest Americans’ retirement expectations are creeping upward. A survey by Northwestern Mutual found that U.S. adults now believe they need $1.46 million to retire comfortably, a significant increase from previous years. This figure represents a 15% jump from the prior year and a massive 53% rise since 2020.
However, there’s a major difference between these aspirations and the reality of retirement savings. The same study revealed that the average American has only saved about $88,400 for retirement, highlighting a huge gap between goals and actual savings. People may want to hit the $1.46 million mark, but they aren't even coming close. Only 7% of people have a $2 million nest egg.
Financial experts endorse different retirement savings targets. Fidelity Investments, for example, no longer provides general estimates because different people have diverse situations. Instead, they propose a plan for saving appropriately according to certain ages, like having 10 times your average salary by age 67.
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Vanguard's research suggests that employees should save between 12% and 15% of their income each year and have an investment mix commensurate with their age, which will help boost their sustainable investment rate. This emphasizes the amount saved and method of investments rather than specifying how much money is needed.
Although Cardone's $5 million objective and real estate investment strategy may sound too ambitious, they underline the importance of rethinking traditional retirement saving goals. This viewpoint urges individuals to go beyond usual benchmarks to measure success by weighing available alternative investing options.
So, whether you are targeting $1.46 million, $5 million, or any other figure altogether, what matters is that you must plan your retirement proactively. With increasing life expectancy rates and rising living costs, many Americans need to rethink their security strategies.
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This article 'Seniors Will Not Be Able To Live On $4k A Month' – Grant Cardone Says You Need $5 Million To Retire Comfortably originally appeared on Benzinga.com
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