Kevin O'Leary Says This 401(k) Habit Is Quietly Killing Your Retirement

Kevin O'Leary, the businessman and star of the show "Shark Tank," regularly appears on TV discussing personal finance, entrepreneurship, and the economy. In several interviews, he has expressed concerns about how Americans use their 401(k)s.

O'Leary explains that he believes Americans are too passive about their 401(k) retirement plans. He says that because so many workers set up their accounts and then forget about them, many people won't be able to retire on time. Here are some of his concerns.

These habits negatively impact retirement planning

Kevin O'Leary consistently speaks about money behaviors such as overspending. He does not cite a lack of personal finance knowledge as the reason that people are unprepared for retirement. Rather, he says that overspending is the root cause because the more people spend, the less they can contribute to their 401(k)s.

That, plus the habit of setting up a 401(k) and forgetting about it, are the primary reasons O'Leary says people do not have enough saved for retirement.

Interest rates on consumer debt can delay retirement

O'Leary says that when people overspend on credit cards and carry high-interest debt, it can make the problem worse. O'Leary frequently says that people do not focus enough on investing in their future. Rather, he says, people spend too much on eating out and neglect to budget accordingly.

O'Leary believes that the more people pay attention to tracking their spending and managing their household budgets, the better they will be able to allocate more money to investing in their future. Today, credit card debt has surpassed $1.2 trillion in America, and many people say that life is unaffordable.

Assuming retirement will work itself out is also a problem

O'Leary also says people assume they will have enough in their 401(k)s at retirement without actually planning for it. Many believe that making catch-up contributions later in life will prepare them for later years. However, O'Leary says it's important to develop discipline when it comes to retirement planning.

In previous generations, many workers could rely on pensions to fund their retirements. However, now the responsibility for retirement savings and investing falls primarily on the worker. That's why assuming you're saving enough or planning to catch up later is not a good strategy, according to O'Leary.

Believing a 401(k) is a complete retirement plan

O'Leary mentioned in interviews that 401(k)s are only one part of a retirement plan. Neither 401(k)s nor Social Security was meant to be the only stream of retirement income. In fact, unless the government passes new policies, Social Security can only pay out 78% of benefits starting in late 2032.

In other words, O'Leary cautions workers that a 401(k) is not a complete retirement plan. It's important that workers take the time to understand fees, their investment mix, withdrawal strategies, and more before retiring.

Not realizing how expensive health care costs will be in the future

O'Leary also cautions people that health care in retirement may be more expensive than they realize. 

New Fidelity data show that those aged 65 retiring in 2026 can expect to spend $185,500 on health care and medical costs in retirement. This is one of the many reasons O'Leary says people will likely need to save and invest more than they realize to get the care they need in retirement.

O'Leary says what people need is simple: discipline

Today, many people are struggling with higher costs of living and high-interest debt. O'Leary is known for his tough love approach. For example, he says most people lack discipline and are too overconfident in their ability to retire. 

Additionally, he says that people, especially young people, eat out too much and are wasteful with their money. The cure to all of that, he says, is to be much more disciplined about tracking expenses and spending.

Direct advice like O'Leary's is helpful for many

Not everyone likes O'Leary's advice, but others appreciate his direct approach. Right now, many people are feeling the stress of rising costs, and O'Leary offers a practical approach to preparing for life's big milestones, such as retirement. 

He also recommends that people have an emergency fund, live on a budget, and pay down high-interest debt as quickly as possible.

Bottom line

Ultimately, if Americans want to save and invest enough to eliminate some money stress in retirement, following O'Leary's advice can help. 

His main message is to encourage people to pay more attention to their finances, become more aware of their 401(k) fees and balances, and not leave their retirement years up to chance. That can be achieved through discipline, something O'Leary wholeheartedly supports.

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Author Details

Catherine Collins

Catherine Collins is a nationally recognized personal finance writer with 15 years of experience who has made 401(k)s her specialty. She covers the policy changes, tax implications, rule updates, and common mistakes that shape how Americans save for retirement, translating Washington proposals and regulatory shifts into practical guidance. Her bylines include U.S. News and World Report, Newsweek, Money, and Entrepreneur.