5 Retirement Planning Tips Kevin O'Leary Swears By
"Shark Tank" investor and entrepreneur Kevin O'Leary has a few go-tos when it comes to retirement advice. From focusing on cash flow to putting at least 15% of your salary into a 401(k), O'Leary has frequently provided tips on how to be better prepared to enter your golden years in the future.
Here are five of the retirement tips he swears by.
1. Contribute at Least 15% of Your Salary to a 401(k)
Concerning retirement planning, O'Leary advised contributing at least 15% of your salary to a 401(k) account. By doing so and taking advantage of the power of compound interest, you could potentially amass $1 million or more in the account by retirement, depending on when you start.
"The average salary in America is $60,000," O'Leary said on an episode of "Good Morning America." "If you invest 15%, you'll end up with $1.5 million in the bank after a career, because it compounds with market returns of 6% to 8%. And you can do it with anything -- all these apps you've got that are available out there, fintech apps, you could download and do this. You must invest 15% -- minimum."
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2. Invest Early
With that in mind, another O'Leary tip is to start saving and investing early. This is something he said he learned from his mother, who invested 20% of every paycheck from the time she was a teen working in a clothing factory.
According to The Penny Hoarder, O'Leary's mom insisted that he save 10% of the birthday checks he got from his grandmother, as well.
3. Be Disciplined About Your Investments
In a popular YouTube video, O'Leary said you should take $100 a week and invest it over a long period of time.
"The markets give you somewhere between a 6% and 8% return over long periods of time," he said in the video. "If you take $100 a week and you start putting it into the stock market and let it grow over 30, 40 years, if you do that and you have that discipline, you'll end up a millionaire in your 60s, where you really need to have some money to retire with. So I think that's a pretty pragmatic strategy."
He also added that not putting aside $100 a week for retirement is "the biggest money mistake people make."
4. Eliminate Unnecessary Spending
O'Leary has suggested countless times that frugality is one key to unlock financial freedom.
"Money might not buy happiness but I can promise you one thing... it's A LOT easier to be happy with financial freedom!! I challenge you to start your journey toward financial freedom today by taking three steps: spend less, save more, invest the rest," he wrote in a Facebook post.
5. Don't Rely on Social Security
In speaking with The Motley Fool, O'Leary warned young people against relying too heavily on programs such as Social Security in the future. "You can't be guaranteed when you're 65 that anyone will be there for you. You have to take care of yourself," he said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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