Fidelity’s 10X Rule is Ridiculous
By: Grant Cardone
Tags: Fidelity, Saving Money, Retirement, The 10x Rule, Retirement Planning

Fidelity is a well-known asset manager with trillions of dollars under its umbrella, including mutual funds, retirement services, and even cryptocurrencies.

They promote their own “10X Rule” but I’m here to tell you it’s anything but 10X.

Here it is:

“Aim to save 10X your salary by age 67.” — Fidelity

They go on to give more details, such as…

By age 30 — save 1X your salary

By age 40 — save 3X your salary

By age 50 — save 6X your salary

By age 60 — save 8X your salary

By age 67 — save 10X your salary

Is this the right goal to have?

Andrew Briggs over at Forbes thinks Fidelity’s 10X Rule sets the bar too high. He even says it’s “over the top”.

This begs the question: Does Fidelity’s 10x rule overstate or vastly understate what people need to save for retirement?

Consider a 40-year-guy who earns an annual salary of around $60,000.

Based on Fidelity’s 10X Rule, he should have $180,000 — which is 3x his annual income — already saved for retirement.

Is that really “over the top”?

Seems pretty tiny to me!

As I graduated college from McNeese State University in the 1980s, becoming a millionaire was an almost iconic and unachievable status.

Upon doing some simple math, though, I realized a million dollars wouldn’t go very far, even back then.

Fast forward to today and a million dollars won’t be even enough money to allow a normal person to retire comfortably — despite what Forbes or Fidelity tells you.

Now, before you decide I am just another arrogant, greedy elitist, do some basic math and you will realize what I did.

While consumption items like cars and trips are nice, they are not the main driver for creating wealth — freedom from worry is.

The whole point of building wealth is achieving financial security, a position from which no single setback could plunge you into destitution.

Many people know firsthand how fast an emergency can devastate a household.

Unexpected medical expenses alone can easily wipe out a 6-digit portfolio.

I know the idea that “a million dollars isn’t enough to retire on” is hard to swallow, but your opinion doesn’t change the reality: A million dollars is simply not what it used to be.

Some people are beginning to suggest that $5 million is the new $1 million.

I would suggest you make it $10 million because inflation continues to eat at the value of what money can purchase and your money earns almost nothing at the bank.

I was earning 10 percent at the bank at the age of 33 and my money doubled every seven years.

That’s not going to happen for you with today’s rates.

For those who want to create multi-million dollar wealth, try these simple steps.

#1 Forget Fidelity’s 10X Rule.

Trade in your baby 10X Fidelity target for a net worth target of $10 million. That’s a true 10X goal.

#2 Avoid all showoff purchases.

At least until you hit the $10 million target. That includes homes, fancy cars, watches, etc.

#3 Save 40%

Get your income levels to where you can save 40 percent of your gross income before taxes. Fidelity’s 10X Rule just isn’t enough.

#4 Invest surplus

Invest surplus cash in illiquid assets that produce additional flows of income. Invest for cash flow with the potential of appreciation long term and never invest where you could lose your capital.

With $10 million in net worth, you should be in a situation to weather almost all events.

So, forget Fidelity’s 10X Rule for retirement. GO BIGGER!

— Grant

Grant Cardone is the author of eight business books, thirteen business programs, and is the CEO of seven privately held companies. Forbes calls him one of the top social media business influencers in the world. Cardone founded and manages a real estate investment firm, Cardone Capital, with $1.2 Billion assets under management. He also travels the world consulting Fortune 500 companies, small business owners, startups and governments on business expansion. One of his enterprises recently hosted The 10X Growth Conference at Marlins Park in Miami, Florida with over 34,000 business people and entrepreneurs in attendance from over fifty countries. Mr. Cardone resides in Miami with his wife, Elena Cardone and their two children, Sabrina and Scarlett.