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About 69 million Americans receive Social Security benefits each month and for some of those beneficiaries, it is a lifeline. Among recipients age 65 and older, 12% of men and 15% of women depend on Social Security for 90% or more of their income. social Security Administration (SSA) reported.
However, long-term projections Committee for a Responsible Federal Budget Show that the Social Security Retirement Trust Fund could go bankrupt by 2032. While this doesn’t mean benefits will disappear overnight, it does raise concerns for workers who are years or decades away from retirement.
It’s this uncertainty that makes private equity fund manager and real estate investor Grant Cardone say people should focus on building their retirement income rather than relying on government benefits.
“Social Security is the promise of cash flow — and if you believe the government can deliver it, you’re more confident than I am,” Cardone told GOBankingRates. “I don’t believe they can work on this.”
Instead of relying on Social Security to finance your retirement, he recommends creating your own source of long-term cash flow — here’s how.
Why can holding too much cash hurt retirement savings?
Cardone, who will host 10X Wealth Summit On May 16 and 17, Miami cautioned against keeping large amounts of retirement money in cash, especially during periods of inflation.
“As they print more money, real assets become more expensive,” he said. “Real estate makes profits; cash doesn’t.”
Inflation erodes purchasing power over time, meaning money sitting idle can buy less each year — a serious concern for retirees who may spend 20 or 30 years in retirement.
Cardone says stocks aren’t reliable retirement income
Although stocks are often seen as a cornerstone of retirement investing, Cardone doesn’t see them as reliable long-term income sources.
“I don’t know if there will be Palantir, Facebook, Google or Tesla in the next 20 years,” he said. “Most of them won’t be here because something will replace them because companies don’t last. The average company today lasts less than 12 years.”
Cardone believes that many artificial intelligence (AI) companies – even those that are currently booming in the market – will likely disappear by the time someone who is now in their 50s is ready to retire.
“Ninety percent of AI companies are going to fail — at least 90%, maybe 98%,” Cardone said.
Another downside of stocks is that most don’t generate income, he said.
“The stock doesn’t have cash flow,” Cardone said. “And stocks that cash flow won’t be here 30 years from now.”
Why Income-Producing Real Estate Attracts Retirement Investors
For Cardone, real estate stands out as a smart long-term investment because it has historically endured economic swings and can generate income regardless of short-term market conditions.
“There is still cash flowing into real estate,” Cardone said.
Instead of focusing on property values, Cardone said retirement investors should pay more attention to how many income-producing units they own.
“If you’re relying on real estate for your retirement account or your entire source of retirement income, it’s really going to be about how many units you own,” Cardone said. “The most important number in real estate is the number of people who pay you some cash flow.”
The Biggest Real World Drawbacks of Real Estate in Retirement
Cardone acknowledged that the biggest downside of real estate investing is the burden of property management.
“The problem with real estate is that when you’re 80, you don’t want to manage it,” he said. “I mean, you don’t want to be managing it even when you’re 28 because it’s a lot of work. It doesn’t matter what age you are – no one wants to deal with termites and plumbing problems.”
As a solution, Cardone suggested a partnership structure in which older investors provide capital while younger partners handle daily operations. This approach allows retirees to benefit from real estate income without taking on responsibilities later in life.
Cardone believes real estate is the best alternative to Social Security income
To replace or supplement Social Security income in retirement, you should:
- An asset that won’t disappear
- Decades of reliable and growing cash flow
- protection from inflation
- Minimal practical management as you age
For Cardone, income-producing real estate is the best answer.
“You need something that doesn’t end,” he said. “You can’t fail and it’s going to be cash flow – and cash flow is going to grow over the next 10, 15, 20 and 30 years.”