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Kevin O'Leary Has a Blunt Message for Anyone Counting on Social Security in Retirement

People who plan to retire on Social Security alone may be in for a rude awakening.

By Maurie Backman , Edited by Laura Hohenstein

Updated Aug. 4, 2026

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Social Security is an important source of income for many retirees. And many people's retirement plans would be a lot more precarious without those benefits.

But people who expect to retire on Social Security alone may be in for an unwanted surprise. Not only are benefits facing potential cuts, but Social Security was never meant to serve as retirees' only source of income.

Shark Tank's Kevin O'Leary warns that seniors who are behind on savings going into retirement need to get serious about changing their ways or otherwise risk a harsh financial reality once their work-related paychecks stop.

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Why Social Security alone may fall short

One big misconception about Social Security is that it's possible to retire comfortably on those benefits because they'll replace most or all of your paycheck. But you should know that if you earn an average wage, Social Security might only take the place of about 40% of your pre-retirement earnings.

That also assumes that benefits are able to be paid in full. Social Security is facing a major financial shortfall that could result in a 22% benefit cut as early as 2032. If that happens, you can expect those monthly checks to replace an even smaller percentage of your former wages, which could make it much more difficult to cover your costs in retirement.

Many financial experts recommend having enough income in retirement to replace 70% to 80% of your former paycheck. So even if Social Security does not undergo cuts, you should still expect to need supplemental income to be able to maintain a decent standard of living.

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Why personal savings matter more

The average monthly Social Security benefit for retirees today is about $2,084. On an annual basis, that's roughly $25,000.

Kevin O'Leary says that the average Social Security benefit is not enough to sustain the typical retiree. So he strongly recommends making changes in the years leading up to retirement if you're behind on building savings. And some of those changes may have to be extreme.

"Radically cut down on all your expenses. Lose the car. Lose the cable. Maybe even lose the cat. You're in an emergency," O'Leary has been quoted as saying. "You have to look at every expenditure with a critical eye and make tough decisions about cash flow."

O'Leary specifically says that the five- to seven-year period leading up to retirement is crucial for savings, and that it's a good time to practice living frugally. If you take action at that point, you may have enough working years ahead of you to build substantial savings if you're behind.

Why passive income matters in retirement

While saving money for retirement is a great way to supplement your Social Security checks, simply putting money into an account like an IRA isn't enough. O'Leary has long been a fan of building investment portfolios that generate passive income. And he thinks that's the right approach to take to retirement savings.

"What piece of advice do I give my kids over and over and over again about money?" O'Leary said, as reported by Fortune. "Don't spend it. Save it. Invest it. Let it compound. That's the gift the market gives you."

If you buy assets like dividend stocks or ETFs (exchange-traded funds) that can generate income, you can then earn income on that income through compounding. Plus, your shares themselves might gain a lot of value through the years.

If you follow this strategy to build a large nest egg passively, you may find that you have enough income to support yourself in retirement, even if Social Security does end up having to cut benefits.

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Why starting early makes a difference

O'Leary's advice to build savings through passive investing is smart. But to really put it to good use, it's important to give your money plenty of time to grow.

An IRA you first start funding at age 45 might only have 20 years to grow if you want to start withdrawing from it at 65. But if you begin funding that IRA at 25 years old, you'll have a 40-year window to grow wealth.

To highlight what a difference that might make, let's say you invest $5,000 for retirement at age 45 and your portfolio generates an 8% return each year. By age 65, your $5,000 could be worth about $23,300. But if you give that $5,000 investment 40 years to grow instead of 20, it could be worth about $108,600, assuming that same 8% yearly return.

Bottom line

Social Security is one of the most important benefits for seniors. But the reality is that retiring on it alone is not easy. And if you go that route, you may end up sorely cash-strapped once you stop working.

The good news is that if you're still working, you have different tools available to you to help build retirement savings. In addition to funding an IRA, you can look to your company's 401(k) plan. And if there's an employer match, that's a great way to snag free money for your retirement nest egg.

Just as importantly, aim to give yourself as much time as possible to invest for retirement. The more years your money is able to grow, the less dependent on Social Security you might be.

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