Kevin O’Leary’s Rule for Turning an Average Salary Into a Million-Dollar Retirement

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Shark Tank personality Kevin O’Leary says middle-class workers can build millionaire-level retirement savings by putting money to work instead of using it for purchases they do not need.

“Let it compound,” he said. “That’s the gift the market gives you.”

His approach is to set aside 15% of every paycheck, along with any side income or cash gifts, and invest it for the long run. Even though higher living costs can make saving that much harder, the numbers behind the strategy are compelling. Followed consistently, it can help create a retirement fund large enough to support travel, family time and other comforts.

Kevin O’Leary’s 15% rule

At its core, O’Leary’s advice is to save and invest 15% of everything you earn, a guideline that is widely used in financial planning. Someone earning $100,000 a year before taxes would need to put away $15,000 annually, or $1,250 each month. A person making $50,000 would need to save $7,500 a year, or $625 a month. As contributions grow over time, so can the value of the portfolio, and compounding returns can add up significantly. At a 7% annualized return over 40 years, monthly investments of $625 could grow to more than $1 million before inflation and taxes.

That $1 million result is not guaranteed, since investment returns can rise and fall. Still, online compound-interest calculators can give savers a rough estimate of how much their money might grow and how much they may need to set aside to reach a target.

Cutting spending to make room for investing

O’Leary also says that reducing expenses can make it easier to save more each month. Tracking spending is a good starting point. There may be a subscription you no longer use, or you may be spending more on entertainment and dining out than you realize. Banking apps often show spending by category, and budgeting tools such as Quicken Simplifi or Monarch can help as well.

Other ways to free up cash include buying a used car instead of a new one, cooking at home rather than ordering delivery and holding off on a phone upgrade. Since housing often takes up the biggest share of a budget, it may also be worth looking for ways to lower rent or mortgage costs. Debt can be another major drain, especially high-interest balances like credit card debt, so paying that down first can be a smart move.

Putting the rule into practice

For someone earning $50,000 and finishing the month with only $100 left after essentials, jumping immediately to $625 in monthly investing may not be realistic. But using that target as a goal can encourage expense cuts, debt repayment and even a side hustle.

A practical place to begin is by contributing enough to a 401(k) to capture any employer match, then gradually raising contributions by 1% every few months or after a raise. Many advisers also recommend using tax-advantaged accounts first and setting up automatic transfers so the money never sits in a checking account. It is also important to keep an emergency fund with at least three to six months of living expenses. After that, depending on your goals, you can look at an IRA, a taxable brokerage account or another savings and investment option.