Retirement Retirement Planning

Kevin O'Leary Raises Red Flag on 401(k) Trouble

He doesn't think people are prepared for retirement.

By Catherine Collins

Edited by Kristy DeSmit

Updated March 23, 2026

Add Us On Google

Kevin O'Leary, best known for his role as an investor on the hit TV show Shark Tank, frequently provides on-air commentary about business, personal finance, and the economy. Recently, he's raised red flags about how Americans use their 401(k) retirement plans and explained why things need to change.

According to O'Leary, Americans are unprepared for retirement and are underusing their 401(k)s. However, O'Leary says these are specific, correctable mistakes as long as people develop discipline and plan properly for their futures.

Steal this billionaire wealth-building technique

The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.

A new company called Masterworks allows everyday investors to buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.

If you have at least $10k to invest, see what Masterworks has on offer. (Hurry, they often sell out!)

O'Leary says this is the worst money mistake people make

O'Leary is adamantly against overspending. He says people don't have enough money to contribute to their 401(k)s because they lack spending discipline.

O'Leary has published several videos explaining that he believes people spend too much money going out to eat and not enough on investing in their future. He believes that if people develop the habit of tracking their spending and budgeting, they will have more money to allocate to investing in their 401(k)s.

Who really has the cheapest auto insurance in your area? Check your zip code here.

High-interest debt destroys retirement accounts, says O'Leary

Another culprit, according to O'Leary, is high-interest debt, such as credit card debt. Currently, credit card debt in America has surpassed $1.2 trillion. This debt traps so many Americans because it compounds in the wrong direction.

O'Leary explains that people must pay down high-interest debt to generate sufficient cash flow to invest enough for a secure retirement. That way, people can start putting money towards their futures rather than continuously paying off past purchases.

The problem is that more than half of Americans are using credit cards to afford basic living expenses right now. So, carefully budgeting and tracking daily expenses is the only way to avoid increasing balances.

Most people are unaware of how expensive health care will be in retirement

Another major red flag that O'Leary discusses is that many people don't realize how expensive their health care bills will be in retirement.

In fact, most retirees will spend over $170,000 on health care, according to recent data from Fidelity. This is one of the reasons O'Leary says that people are not prepared to retire comfortably. Many workers will need to invest and save for a larger nest egg than they realize, he explains.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

Whether or not you’re a new homeowner, a home warranty from Choice Home Warranty could pick up the slack where insurance falls short and protect you against surprise expenses. If a covered system in your home breaks, you can call their hotline 24/7 to get it repaired.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

The key to a successful retirement is multiple streams of income

O'Leary reminds people that a 401(k) was never meant to be the only source of retirement income. Additionally, Social Security was never meant to be the only source of income in retirement, either. He says that far too many people don't save enough in their 401(k)s because they think Social Security will be enough to sustain them.

However, Social Security can pay out only 77% of expected benefits starting in 2033 unless new laws change how it's funded. And right now, there is no pending solution to solve this discrepancy. Additionally, as evidenced by the cost of health care alone, retirees will need multiple streams of income and several types of investment accounts to support their basic retirement needs.

O'Leary's formula: face reality and develop discipline

O'Leary says that to save enough for retirement, workers need to face reality. O'Leary says that, unfortunately, many workers are overconfident about their investment returns. They set up their 401(k) and forget about it, assuming it will be enough, he says.

However, with rising inflation, a higher cost of living, and high levels of household debt, workers will need to develop greater discipline in paying down debt and allocating more of their income to retirement savings.

A summary of O'Leary's tough love money advice

In sum, O'Leary says that people are extremely capable of working and saving enough to fund a good retirement. However, to do that, they need to face reality and understand just how much retirement truly costs.

He advises people to set up a budget, always have a 10% cushion, pay down high-interest debt aggressively, and use their last working years to prepare to live on a fixed income.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

Why O'Leary's advice resonates with so many

Although O'Leary's advice comes across as harsh or direct, many people appreciate his viewpoints because, by following his own advice, he has become a successful businessman with significant wealth.

In times of economic uncertainty, having a clear, direct voice that offers specific advice is sometimes what people need.

Bottom line

If Americans want to have a stress-free retirement, Kevin O'Leary says they have to plan better. Developing discipline in spending, creating a budget, and living below their means is necessary if people want to save and invest enough to truly enjoy their golden years.

Additionally, adapting to changing times and avoiding high-interest debt not only now but also in retirement can help achieve that goal.

More from FinanceBuzz: