For decades, Americans have been told that 401(k)s and IRAs are the golden ticket to a secure retirement. But according to entrepreneur and real estate investor Grant Cardone, the wealthy don’t follow this script. Instead, they focus on strategies that generate consistent income, not just savings accumulation.
The Problem with Traditional Retirement Plans
The core issue isn’t saving for retirement—it’s how you save. Cardone points out that financial institutions like Vanguard and Fidelity profit handsomely from managing retirement accounts. While these firms benefit, the average investor may be missing out on more effective strategies. The traditional approach relies on a lump sum that must last decades, whereas real wealth focuses on ongoing cash flow.
What the Wealthy Actually Do
Instead of relying on traditional retirement vehicles, wealthy investors mimic what financial institutions do with their own money. This means:
- Insurance Products: Wealthy investors use insurance to protect and grow their capital.
- Passive Income Businesses: Investments in companies that produce regular cash flow, not just stock volatility.
- Income-Producing Real Estate: The cornerstone of the strategy, providing both income and long-term appreciation.
Why Real Estate Dominates
Cardone argues that real estate is the only asset class that hits all four key criteria for wealth building:
- Preservation of Capital: Unlike savings or stocks, real estate tends to hold its value better over time.
- Passive Income: Rental properties provide a reliable monthly income stream.
- Appreciation: Real estate values historically increase, adding to long-term wealth.
- Tax Benefits: Real estate offers significant tax write-offs, reducing overall financial burden.
Cardone himself keeps 95% of his wealth in real estate, because even during market downturns, rental income remains stable. He notes that rent prices have steadily increased over decades—from $27 a month in 1940 to $2,000 today—and predicts rents will reach $3,000 within seven years, creating substantial wealth for landlords.
The Bottom Line
The wealthy don’t just save for retirement; they build income that sustains them. By shifting focus from lump-sum growth to consistent cash flow—primarily through real estate—investors can secure their financial future without relying on the traditional 401(k) model. The key isn’t just having money when you retire; it’s continuously generating more.
