Oct 11, 2023
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 recent 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.
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.
O’Leary says he used to advise students to pay their loans off first before saving for retirement, but 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.
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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 recent 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.
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.
Mercer projects contribution limits will increase by $500 next year to $23,000 a year, so prospective retirees could contribute even more to their 401(k) plans if they’re able.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
