Serah Louis
·4 min read
At 69, Kevin O’Leary is perhaps past the traditional retirement age, and he’s showing no signs of swapping his suit for sweatpants. But when the “Shark Tank” star and entrepreneur does choose to hang it up, he’ll have a tidy nest egg waiting for him, which he set up long before hitting his senior years.
And he has some advice for his fellow Americans if they want the same peace of mind: put at least 15% of your salary into a 401(k) account — and he isn’t accepting any excuses.
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“Stop buying all that crap you don't need. You have to adjust your lifestyle to make sure you put 15% away,” Mr. Wonderful insisted on an episode of Good Morning America's Swimming with Sharks.
“You’ll end up with $1.5 million in the bank after a career.”
Research shows Americans require over $1M for retirement
A 2023 study from Northwestern Mutual found adults 18 and older expect they need $1.27 million in savings to retire comfortably — an increase from $1.25 million last year.
At the same time, the study shows that the average amount of money that U.S. adults have saved for retirement is just $89,300.
While many experts, including O’Leary, advocate for setting retirement funds aside as early as possible, most Americans are juggling other financial responsibilities, like mortgages or student loans. And many have found themselves caught up in consumer debt too. Between all those expenses, it can be hard to imagine setting aside money for the future when the needs of today seem so pressing.
However, while O’Leary says he used to advise students to pay their loans off first before saving for retirement, he’s since changed his tune.
“You have to do both — pay your loans off and invest a portion of your income every year,” he says, explaining this strategy helps folks get into the discipline of saving money early on.
“That’s how you succeed into retirement.”
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Contributing 15% to your 401(k) each year
Of course, not all companies offer 401(k) plans — but there are other options for saving for retirement, like a traditional IRA or Roth IRA. Just bear in mind that these plans come with significantly lower contribution limits and option of employer matches.
As of 2022, 69% of private industry workers had access to retirement plans through their employer, according to Bureau of Labor Statistics data, but a quarter of that group chose not to take advantage of them.
And a 2023 CNBC Your Money Survey found that some workers aren’t necessarily making the most out of their employer-sponsored plans, with 8% saving only the automatic default amount, and 24% putting away as much as their employer will match.
O’Leary says Americans should be investing 15% of their annual salary — assuming an average salary of around $60,000 a year — into a 401(k) at minimum, in order to successfully retire one day.
He points to the abundance of investment apps, which make investing in the stock market far more accessible to the average person than it used to be.
“It compounds with market returns of 6%-8%,” he adds, explaining that the power of compound interest could get you a cool $1.5 million in the bank by the time you retire.
As of Jan. 1, you can now contribute up to $23,000 to your 401(k) this year. That's a $500 increase from the year before, meaning you have even more room to start working towards that cool $1.5 million today.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
