As American workers manage their day-to-day costs — covering housing, vehicle expenses, phone bills, and groceries — many also contemplate how much they should allocate for savings and investments to secure their retirement.
Kevin O’Leary, the well-known entrepreneur and investor from ABC television’s Shark Tank show, shared a major statement on Social Security and retirement planning. He emphasized the fact that Social Security alone isn’t enough for a comfortable retirement — and encouraged Americans to rethink their financial strategies.
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O’Leary advises retirees to strive for replacing around 65% of their pre-retirement income upon leaving the workforce.
He strongly supports 401(k) plans and IRAs, emphasizing their tax advantages and the benefits of employer matching contributions.
His guidance centers on maintaining financial discipline, reducing debt, and adjusting lifestyle expectations to build a secure and sustainable retirement.
Related: Dave Ramsey bluntly warns Americans on 401(k) alarm
O’Leary underscores a critical reality: Social Security was never intended to serve as a retiree’s sole financial lifeline.
With the average monthly Social Security benefit hovering around $1,900, or approximately $23,000 per year, it falls short of providing the level of financial security most retirees seek.
To build a more reliable financial future, many workers turn to employer-sponsored 401(k) plans, which often include company matching contributions — an added incentive for saving.
Traditional IRAs allow people to contribute pre-tax dollars, deferring taxes until retirement when withdrawals begin.
Conversely, Roth IRAs require taxes to be paid upfront on contributions, granting retirees the advantage of tax-free withdrawals later in life.
Recognizing these factors, O’Leary offers further insights on Social Security benefits and ways to secure additional sources of retirement income.
Shark Tank’s Kevin O’Leary talks with TheStree at the New York Stock Exchange. O’Leary explains his views on Social Security, including specific ways to invest and save for a comfortable retirement.
Image source: TheStreet
Shark Tank’s Kevin O’Leary warns Americans on Social Security monthly paychecks
O’Leary takes note of the low average annual income retirees can expect from Social Security benefits.
“That’s it, folks. That’s poverty-level retirement, no doubt, so you have to be savvy. And very strategic,” he wrote in his book, Cold Hard Truth for Men, Women & Money.
O’Leary explained how, for people who have waited longer than they should have to begin planning for retirement, they can still play some catch-up on their retirement income so they aren’t primarily dependent on Social Security.
More on retirement:
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“When you’re sixty years old, broke, and contemplating a sparse retirement, you start thinking about all the stupid crap you bought when you were younger,” O’Leary wrote. “You have to stop that cycle of regret. It leads to a hopelessness that can only trigger inaction and depression. That money’s gone and buried.”
He explains a mental shift a person can take to adopt a new financial mindset.
“I’m a realist,” he wrote. “I’m not going to tell you the next decades are going to be easy. It’s time to throw out all those expectations you had about how life was going to be in your twilight years. It’s time to start planning for something completely different.”
Related: Shark Tank’s Kevin O’Leary sends major message on Social Security
Kevin O’Leary explains adding to Social Security benefits with more retirement income
In order to become less dependent on Social Security monthly paychecks in retirement, O’Leary offers some financial goals.
“If you’re five to seven years away from retirement, you still have a few options to top off that income,” he wrote. “You can see how even $5,000 a year more will make all the difference in your quality of life. And if you live another fifteen years after retirement, you’re really looking at saving only $75,000 to get to that. You can do that in five to seven years. But you have to be ruthless.”
“Radically cut down on all your expenses. Lose the car. Lose the cable. Maybe even lose the cat. You’re in an emergency situation,” O’Leary continued. “You have to look at every expenditure with a critical eye and make tough decisions about cash flow.”
O’Leary advises retirees to downsize early, live near key amenities, and consider a roommate to share expenses. Stay active — walking and biking boost health and mood. Keep strong insurance coverage, as health surprises are inevitable. Prioritize savings over supporting adult children; your retirement comes first.
“Five to seven years before retirement is the time to practice living frugally, the Shark Tank investor wrote. “Get used to deprivation before you’re deprived. You’re trying on what it feels like to live within your new means.”
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
