As GOBankingRates recently wrote about, famed real estate investor and New York Times bestselling author Grant Cardone believes that the amount of money a person needs to retire has increased substantially. While $1 million in retirement used to be a safe amount of money to have stashed away, Cardone says you should target $5 million of assets in order to retire comfortably.
He argues this new number is the result of people living longer and a higher cost of living. If you retire at 63, you will need money to last for several decades. One million dollars may simply not stretch far enough to cover 30 years with the increasing cost of goods and services. But is $5 million more than you need? We asked financial experts to weigh in on Grant Cardone’s $5 million magic retirement number. Here is what they think.
Not all experts agree that every person would need $5 million of assets under management to retire. Most note that it is not a one-size-fits-all approach. Things like where you live and your desired retirement lifestyle may all affect how much money you need.
Dana Anspach, CFP, RMA, founder and CEO of Sensible Money, LLC , a fee-only registered advisor firm with a national clientele, said, “It is absurd to propose every household target at a $5 million nest egg. The missing piece of that equation is how much you spend. The majority of Americans retire comfortably with substantially less than $5 million.”
She added, “We serve many client households who retired with less than $1 million. One even has two homes, a paid-off place in an upscale trailer park in Scottsdale, and a summer place in a small Arizona town northeast of Phoenix.
“It may take $5 million if you need to drive the latest model car, regularly eat out at upscale restaurants, and wear the latest fashions, but for most retirees, these things are not top priorities,” she said. “Instead, they value time with family and the freedom to wake up without an alarm clock.”
Almost any financial expert you speak to agrees that the most successful retirement starts with a plan. It is strongly recommended that you speak with a financial planner or advisor to set up a realistic plan that helps you achieve your retirement goals.
Anspach, who has over 25 years of experience in the financial industry and has authored several books on retirement planning, explained, “The most important factor in achieving retirement isn’t the dollar amount of savings; it’s having a plan that shows you what is realistic and when you can accomplish it.”
Consider Moving Abroad
It is undeniable that retiring in certain places in the United States is expensive. Your fixed income may not be enough to cover your dream cottage on the West Coast or high rise in Manhattan, but it could be sufficient to fund a comfortable retirement abroad. If you want to retire and think you’ll need a lot, but haven’t stashed away $5 million, some experts suggest looking to less expensive countries.
“U.S. Citizens have been buying real estate in tropical destinations such as Brazil and Spain using cash at hand or even self-directed-IRA LLCs. Such purchases allow them to secure permanent residency or even citizenship after a few years. While $5 million may be needed for a safe retirement in the U.S., one could comfortably retire in these countries with much less”, said Luciano Oliveira, managing partner of the U.S.-based law firm Oliveira Lawyers with offices in Dallas, Los Angeles and abroad.
Is $5 Million the New Magic Retirement Number?
It seems that most financial experts can agree on one thing when it comes to retirement, there is no true magic number. The amount of money you will need depends on a number of factors, including where you want to live and your lifestyle.
With more people considering early retirement and living longer, their money is having to stretch further than ever before. To determine if you have enough cash stashed for your dream retirement, you should speak with a financial advisor or retirement expert who can put together a solid plan for your future.
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