Shark Tank’s Kevin O’Leary reveals EXACTLY how much of your salary you should be putting into a Retirement Savings each year – and how you can end up with over one and a half MILLION in retirement.
Kevin O’Leary reveals how much of your salary you should invest in your Retirement Savings each year for a comfortable retirement.
According to O’Leary, if the average American on a salary of around $60,000 a year set aside 15 percent of their income they would have one and a half million saved up come retirement. ‘The number is 15 percent,’ he said during an appearance on Good Morning America’s Swimming with Sharks.
And for those that think they don’t have enough surplus cash, O’Leary had a message: ‘Stop buying all that crap you don’t need. You have to adjust your lifestyle to make sure you put 15 percent away.’ The Canadian investor, also known as Mr. Wonderful, issued the advice ahead of the premiere of the 15th season of the hit show Shark Tank which airs tonight.
What’s Next For Your Retirement Savings Plan?
During the segment, a viewer asked whether he should prioritize paying off his student loans or saving toward retirement. ‘The amazing thing is, I used to say pay your loans first but I learned something with my students. You have to do both, pay your loans off and invest a portion of your income every year,’ said O’Leary. ‘That’s the only way to get into the discipline of doing this every single month. That’s how you succeed into retirement,’ he added. To organize these savings, the investor encouraged the use of new financial planning apps. He said that if an American on an average salary of $60,000 saves 15 percent of their income, they will end up with ‘a million and a half in the bank after a career.’ ‘Because it compounds with market returns of 6 to 8 percent,’ he added. ‘You must invest 15 percent minimum.’
According to NerdWallet’s retirement calculator, if a 30-year-old with nothing saved started putting away 15 percent of a 60,000 salary pre-tax into a Retirement Savings Plan, that would leave them with more than $1.9 million by the average retirement age of 67. This also assumes a salary increase of 2 percent per year, an average annual inflation rate of 3 percent, and a life expectancy of 95. A Retirement Savings Plan is a private plan into which an individual and their employer both contribute – and it is usually responsible for the bulk of a retiree’s income. The current contribution limit is $22,500 per year – and consultancy firm Mercer predicts the limit will increase to $23,000 in 2024 in line with living costs.
O’Leary’s comments come as a recent study by Bankrate revealed that more than half of American workers felt they were falling short of their retirement goals. Some 56 percent of American workers said they feel behind on their retirement savings – and 37 percent said they feel ‘significantly behind.’ Older workers were more likely to feel that way, the study found. Nearly 70 percent of workers aged between 43 and 58, and 60 percent of those aged between 59 and 77, said they felt behind. By comparison, less than 50 percent of those aged 42 or younger had those concerns.
Source: NEIRIN GRAY DESAI. “Shark Tank’s Kevin O’Leary reveals EXACTLY how much of your salary you should be putting into a 401(K) each year – and how you can end up with over one and a half MILLION in retirement” DAILYMAIL.COM, September 29, 2023, https://moneyweek.com/personal-finance/4-per-cent-pension-rule
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