Retirement Retirement Planning

Kevin O’Leary Says Most Americans Are Making This 401(k) Mistake

It could cost you thousands of dollars.

By Catherine Collins

Edited by Laura Hohenstein

Updated Feb. 2, 2026

If you love watching Shark Tank, you're probably familiar with Kevin O'Leary. Known as Mr. Wonderful, O'Leary has developed a reputation for giving no-nonsense, sometimes blunt, financial advice to Americans. Over the past year, he has sounded the alarm about 401(k) retirement plans.

In this article, we'll discuss the number one mistake O'Leary says most Americans make when it comes to their retirement accounts. Gathering quotes from multiple interviews, we will give you a comprehensive look at what O'Leary says is the problem with Americans' savings habits today and what you can do about it.

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Americans are not saving enough

The top mistake that Americans make with their 401(k)s, according to O'Leary, is that they simply are not saving enough for their retirement plan. On top of that, O'Leary says that so many Americans, especially those who are not earning high incomes, spend money needlessly and without thinking. In an interview with The Street, he says that Americans save so little towards their 401(k) plans because their poor spending habits leave no extra money to contribute meaningfully to 401(k)s.

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How Americans can save more

If people want to learn how to save more money or how to spend less in order to contribute more to their 401(k)s, O'Leary says that it's important to focus on paying down high-interest consumer debt. He explains that when people have high-interest debt, such as credit card debt, their money goes toward payments rather than toward future investment gains. In order to create space in your monthly cash flow, working hard to pay down high-interest debt quickly is one of the best ways to find extra cash that you can allocate to your retirement savings.

Why saving for retirement matters more than you think

While retirement seems like a distant goal for many people, one aspect of retirement that many people don't realize is that it can be quite expensive. Many people think that when they're retired, life will be affordable because their mortgage and other debts will be paid off. However, according to a Fidelity Investments 2025 Retiree Healthcare Cost Estimate, a 65-year-old retiree can expect to spend over $170,000 on health care alone during their retirement. With rising costs on everyday items such as groceries, planning to have more than you need in retirement is becoming increasingly important.

Why you can't rely on Social Security alone

In 2027, the full retirement age for Social Security will be raised to 67. Although it's unlikely Social Security funds will run out, the 2024 Social Security and Medicare Board of Trustees report estimates that after 2033, if Congress doesn't make any changes, Social Security will only have enough funds to pay 79% of benefits. Although Social Security funds will add an income stream in retirement, O'Leary stresses that Social Security is not meant to fund retirement completely. Most people will need to use retirement account income, in addition to Social Security income, to live comfortably in retirement

The importance of discipline

Ultimately, O'Leary says the main ingredient for combating the mistakes Americans are making with 401(k)s is discipline. In fact, O'Leary says that discipline is the key to wealth creation. It takes consistent investing over time, taking advantage of employer matches, and being mindful of spending in order to be able to save and invest enough for retirement.

O'Leary's trick to prepare for retirement

If you are nearing retirement and you're not sure whether or not you are prepared, O'Leary suggests that you spend the last few years of your career practicing living on a lot less than you currently do. He suggests developing more disciplined spending habits and to start tracking your expenses more. It can be a tough transition to retirement, going from living on a salary to living on a fixed income. By investing as much as possible during your last working years and practicing budgeting, you can be much better prepared for life as a retiree.

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Why people listen to Kevin O'Leary

Although O'Leary's advice can seem harsh to many, it resonates now because there is significant uncertainty in the world. The American economy is changing, and the stock market has had challenging days over the last few months. Sometimes, what people need is a bit of tough love, and O'Leary provides that in droves.

Bottom line

People interview Kevin O'Leary because he is always available to provide interesting sound bites that cause people to reevaluate their personal finances. Over the last few years, he has become especially vocal about people's spending habits and how they will impact their ability to retire comfortably in the future. O'Leary is a huge proponent of developing financial discipline, and that is what he says is required to combat one of the top 401(k) mistakes Americans are making: not saving enough for retirement.

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