Kevin O'Leary Says You Can Retire on $500K - We Ran the Math in 8 Popular Retirement Cities

Kevin O'Leary has argued that $500,000 could be enough to retire if it produces around 5% annually. On paper, that means collecting $25,000 per year without spending the principal.

That promise comes with some hefty conditions: You need a paid-off home, no debt, modest spending, and an affordable location. With prices still squeezing retirees, where you live could determine whether this retirement plan feels comfortable or painfully restrictive. Here's how the budget holds up in eight popular retirement cities.

Editor's note: All cost-of-living estimates are taken from the Elder Index, which measures the income older adults need to meet their basic needs.

How O'Leary's $500,000 retirement math works

O'Leary's calculation assumes the entire $500,000 remains invested and reliably earns 5%, producing $25,000 annually. Add the average retired-worker Social Security benefit of $2,085.98 per month as of July 2026, and the total gross income becomes approximately $50,032 per year.

That 5% figure is optimistic. Morningstar's latest research places a conservative starting withdrawal rate closer to 3.9%, which would reduce the combined budget to about $44,532.

How we compared the cities

We used the 2025 Elder Index, which estimates basic expenses for a single older adult in good health. Its budgets include housing, food, transportation, health care, and everyday essentials.

Other costs include property taxes, insurance, utilities, and applicable condo fees. However, the index excludes recreation, travel, gifts, savings, and long-term care. The figures below therefore represent the floor, not a lavish or even necessarily comfortable lifestyle. They also come before income taxes; under this scenario, some Social Security benefits could be federally taxable.

The Villages, Florida: The numbers work

A mortgage-free homeowner in The Villages metro area needs an estimated $24,792 annually for basics. A renter needs about $30,180. That leaves roughly $25,240 or $19,852, respectively, from the $50,032 budget.

Florida has no individual income tax, which helps. For someone who already owns a home and avoids costly club memberships or frequent travel, O'Leary's claim looks realistic here.

Myrtle Beach, South Carolina: Plenty of breathing room

The basic annual budget is approximately $22,536 for a mortgage-free homeowner and $31,056 for a renter. That creates a cushion of roughly $27,496 or $18,976.

South Carolina does not tax Social Security and offers retirement-income deductions to eligible residents. Myrtle Beach's entertainment and dining scene could tempt retirees to spend more, but the essential cost structure leaves room for a modestly comfortable retirement.

Tucson, Arizona: Affordable, with a tax caveat

Tucson's estimated basic costs total $22,836 for an owner without a mortgage and $29,088 for a renter. That leaves between $20,944 and $27,196 for taxes, recreation, emergencies, and other expenses.

Arizona does not tax Social Security, although income generated by the $500,000 portfolio may face state tax. Even so, Tucson is one of the stronger locations for making this strategy work.

Asheville, North Carolina: Housing changes the result

A mortgage-free homeowner needs approximately $22,464 annually for essentials, leaving a substantial $27,568 cushion. Renters face a higher basic budget of $32,568, reducing the leftover income to $17,464.

North Carolina exempts Social Security from state income tax, but most other retirement income remains taxable. Asheville could work, though renters would have considerably less room for travel, homeownership savings, or rising medical bills.

Sarasota, Florida: Ownership is the dividing line

Basic costs run about $25,416 for a mortgage-free homeowner and $35,784 for a renter. That leaves approximately $24,616 for the owner but only $14,248 for the renter.

Florida's lack of an individual income tax helps, but homeowners still face insurance, property taxes, and storm-related costs. Sarasota supports O'Leary's argument best when the home is already paid off and adequately insured.

Naples, Florida: Possible, but not especially cushy

Naples requires approximately $29,424 annually for a mortgage-free homeowner and $36,432 for a renter. The resulting cushion is about $20,608 for the owner or $13,600 for the renter.

Those numbers cover more than necessities, but Naples' restaurants, recreation, and other lifestyle costs could consume the remainder quickly. Retiring here on $500,000 looks possible under O'Leary's conditions, though "comfortable" would depend heavily on spending habits.

Honolulu, Hawaii: The budget becomes tight

Honolulu's annual basic costs are approximately $27,144 with a mortgage-free home and $42,756 when renting. A renter would have just $7,276 left before income taxes, travel, emergencies, or nonessential purchases.

Hawaii exempts Social Security from state tax, but portfolio income may be taxable. The plan could work for someone who already owns a home, but a newcomer paying rent would likely find it too restrictive for a comfortable retirement.

San Diego, California: It falls short without a paid-off home

A mortgage-free San Diego homeowner needs around $26,400 for basic expenses, leaving a seemingly healthy $23,632. A renter, however, needs approximately $44,352, leaving only $5,680 before taxes and discretionary spending.

California does not tax Social Security, but it generally taxes investment and retirement income. Without a paid-off property separate from the $500,000 portfolio, O'Leary's plan falls short of providing much comfort here.

Bottom line

Retiring on $500,000 may be possible when Social Security supplements your investment income, but the location and housing situation matter enormously. The numbers look strongest for retirees who own their homes outright, carry no debt, and are willing to keep everyday spending modest.

Remember that money used to purchase a retirement home can no longer generate income. Spending $100,000 of the portfolio on a house would reduce the projected 5% income by $5,000 per year. Choosing a less expensive property could preserve more of the nest egg and free up your retirement budget.

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