Kevin O’Leary, the star of “Shark Tank” and a successful entrepreneur, has some valuable advice for Americans who want to secure their retirement. O’Leary, who is 69 years old and still actively involved in business, recommends putting at least 15% of your salary into a 401(k) account.
According to O’Leary, the key to retirement success is to stop spending money on unnecessary things and adjust your lifestyle to prioritize saving. He emphasizes that by consistently putting away 15% of your salary, you can accumulate a substantial nest egg of $1.5 million by the time you retire.
This advice aligns with recent findings from Northwestern Mutual, which revealed that adults aged 18 and older believe they need $1.27 million in savings to retire comfortably. This figure has increased from $1.25 million in the previous year.
While O’Leary acknowledges that many Americans face financial obligations such as mortgages and student loans, he advises individuals to prioritize both loan repayment and retirement savings. By doing so, individuals can develop a disciplined approach to saving money from an early stage.
Although not all companies offer 401(k) plans, there are alternative options available, such as traditional IRAs or Roth IRAs. However, it’s important to note that these plans have lower contribution limits and may not include employer matches.
According to the Bureau of Labor Statistics, as of 2022, 69% of private industry workers have access to retirement plans through their employers. However, 25% of this group choose not to take advantage of these plans.
A CNBC Your Money Survey further revealed that some workers are not maximizing the benefits of their employer-sponsored plans. Only 8% save the automatic default amount, while 24% contribute as much as their employer matches.
O’Leary suggests that Americans should aim to invest 15% of their annual salary, assuming an average salary of $60,000 per year, into a 401(k) plan. He also highlights the accessibility of investment apps, which make it easier for the average person to invest in the stock market.
By taking advantage of compound interest and market returns of 6%-8%, individuals can potentially accumulate $1.5 million in their retirement accounts. Additionally, Mercer projects that contribution limits for 401(k) plans will increase by $500 in the coming year, providing an opportunity for individuals to contribute even more.
It’s important to remember that this article is for informational purposes only and should not be considered as financial advice.
