Retirement Retirement Planning

Kevin O'Leary Says Most People Have the Wrong Idea About What Makes a 401(k) Work

The key to a successful retirement is your habits.

By Catherine Collins , Edited by Laura Hohenstein

Updated July 29, 2026

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Kevin O'Leary, also known as Mr. Wonderful, is a highly successful entrepreneur who is best known for his role as an investor on the hit TV show Shark Tank. O'Leary is known for his blunt take on a wide range of topics. He doesn't sugarcoat what he thinks Americans should be doing to set themselves up for financial success.

Recently, O'Leary discussed 401(k) retirement plans and what he believes Americans should do to adequately prepare for retirement. Ultimately, he explains that people should not rely on the government or any particular type of retirement account to build long-term security. Here's what he says instead.

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Retirement success is not about 401(k)s; it's about behavior

Kevin O'Leary is not against 401(k) accounts. In fact, he has given multiple interviews where he encourages people to take advantage of their employer-sponsored 401(k) retirement plans and any matching contributions their employer offers.

While he has warned that people rely too much on 401(k) retirement plans, he has recently emphasized that people are not disciplined enough with their spending. His commentary has shifted to focusing on human behavior with their personal finances.

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O'Leary says too many people have misconceptions about retirement

Kevin O'Leary says people believe investing in a 401(k) will be enough to prepare them for retirement. Many people also don't invest enough in their 401(k)s because they believe Social Security will help them afford bills when they retire.

However, many people don't realize that a 401(k) alone will not be enough. Additionally, he warns that Social Security will not be enough to sustain retirement either. Being able to successfully retire will take constant discipline over several decades, he explains. Additionally, it will require multiple sources of income, not just one.

O'Leary stresses that people are not saving enough for retirement

Kevin O'Leary doesn't even want you to spend your birthday money on fun. He says that every time you get money, you need to invest a portion of it, even if it's a check for your birthday.

He is strongly against people spending a large portion of their money on eating out or on frivolous purchases. O'Leary doesn't even want to hear protests about people who say they don't have extra money to invest. He says that people waste money on meaningless items every day. Because of that, he believes there is a way for everyone to start investing, even if it's a small amount.

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O'Leary says retirement is more expensive than you think

While most people think that retirement means that you'll have fewer expenses, O'Leary wants people to know that it might cost far more than they think. He says that health care costs can be extremely expensive, especially in retirement.

Data from Fidelity shows that most retirees above age 65 can expect to spend $185,500 on health care during their retirement. For that reason, even if retirement seems far off, it's vital to save and invest as early as possible.

O'Leary warns about the crippling effects of high debt levels

Of course, it can be challenging to invest in a retirement account when you are saddled with significant debt. Currently, U.S. credit card balances exceed $1 trillion. Many people also have student loan debt, car debt, mortgages, and other personal debt that cuts into their ability to maximize their retirement savings.

O'Leary has frequently encouraged his followers to pay off debt as soon as possible. He believes that high-interest consumer debt is dangerous and can prevent people from reaching their retirement goals.

Why people listen to Kevin O'Leary

Over the last few months, there has been significant economic uncertainty. The stock market has been turbulent. Inflation has led to rising prices. Many people are having a difficult time paying for their everyday bills.

Kevin O'Leary resonates with so many people because he provides clear, common-sense advice that tells people what they need to hear.

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The first step to increase your retirement savings

The fastest way to increase your retirement savings, according to O'Leary, is to pay down high-interest debt to create more cash flow.

He also suggests that people practice living on their retirement income before they actually retire. This helps people prepare for living on a fixed income.

Bottom line

Ultimately, Kevin O'Leary is in favor of people having a stress-free retirement. In order to do that, he says people need to have more discipline, watch their spending, pay off debt, and properly plan for retirement.

By investing in 401(k)s and Roth IRAs regularly and consistently, O'Leary says it's possible for people to retire comfortably.

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