Grant Cardone: These Are the 2 Biggest Misconceptions About Retirement
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Many Americans look forward to their retirement years and put effort toward saving up for their post-work chapter of life. And while this may be a new chapter, it’s important to have realistic expectations about what this time in your life could be like, as well as how to best ensure financial stability during this time.
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Grant Cardone, author of the book “The Wealth Creation Formula,” said that many people hold misconceptions about retirement, including these two commonly held beliefs.
Misconception No. 1: Your Retirement Years Are Your ‘Golden Years’
Before hitting retirement, you may have grandiose ideas about all of the things you want to see and do during this time of your life. But Cardone said it’s important to be realistic about the limitations you’re likely to face in your older years.
“You’re 65 — it ain’t golden,” Cardone told GOBankingRates. “Your knees hurt.”
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Misconception No. 2: The Best Way To Be Financially Prepared Is To Have a Large Nest Egg in Retirement Savings
Conventional retirement advice says to save a set amount in retirement accounts that you can tap into once you retire — but Cardone doesn’t think this is wise.
“People need cash flow when they retire,” he said. “They do not need a lump sum out of their retirement. No other time in your life will cash flow be more important than when you’re retired.
“You need your expenses paid, you need travel money. By that time, you should be out of debt. You don’t want a home — you want to travel. When you’re 65 years old, you’re not making big investments. You’re just paying expenses every year.”
Having cash flow in retirement can also help you pay for a big expense that many people forget about or don’t budget enough for — long-term care.
“The cost today is about $7,800 a month to put your parents in a home because you’re not equipped to handle them no matter how much you love them,” Cardone said. “[Many people plan for] their Social Security and their retirement account to take care of them, but they can’t.”
Instead of placing your funds in a retirement account, Cardone said the better move is to invest in income-producing assets.
“People should learn how to make big investments in their earning years in assets that will cash flow for them when they can’t earn anymore,” he said. “The goal would be to have more passive income in retirement than earned [income] because you’re not going to have earned income anymore.”
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This article originally appeared on GOBankingRates.com: Grant Cardone: These Are the 2 Biggest Misconceptions About Retirement