Kevin O'Leary's Saving Rule That Could Help a Middle-Income Worker Retire Rich

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Kevin O’Leary, known from Shark Tank, says one straightforward habit can help middle-class workers build millionaire-level retirement savings: put money to work instead of spending it on things you do not need.

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

His advice is to save 15% of every paycheck, along with any side-hustle income or cash gifts, and allow those funds to grow over time. Even though higher costs can make saving that much harder, the long-term math behind the strategy is compelling. Done consistently, it can lead to enough money for a comfortable retirement, with room for travel, time with family and other goals.

O’Leary’s 15% saving guideline

At its core, O’Leary’s rule is to save and invest 15% of everything you earn, a familiar standard in financial planning. If your annual pre-tax income is $100,000, that means putting away at least $15,000 a year, or about $1,250 a month. For someone earning $50,000 a year, the target would be $7,500 annually, or $625 each month. As your contributions grow over time, so can the returns in your portfolio. For example, investing $625 a month at a 7% annualized return for 40 years could grow to more than $1 million before inflation and taxes.

That $1 million outcome is not guaranteed, since market returns vary. Still, compound-interest calculators can help estimate how much your money may grow and how much you may need to save to reach a target.

Ways to reduce spending

O’Leary also says saving more each month often starts with cutting expenses. Tracking where your money goes can uncover opportunities to save, such as an unused subscription or more spending on dining out and entertainment than you realized. Many banking apps break down spending by category, and budgeting tools such as Quicken Simplifi or Monarch can also help.

Other practical steps include buying a used car instead of a new one, cooking at home rather than ordering delivery and putting off your next phone upgrade. Because housing is often the biggest monthly bill, it may also be worth looking for ways to lower rent or mortgage costs if you want to free up a meaningful amount of cash. Debt can be another expensive drag, especially high-interest balances like credit cards, so paying those down may deserve priority.

A simple way to put it into practice

If you earn $50,000 a year and have only $100 left at the end of each month after essentials, reaching a $625 monthly investing goal probably will not happen overnight. Even so, that target can be enough to motivate you to cut costs, reduce debt and look for extra income from a side job.

A good starting point is contributing enough to your 401(k) to receive the full employer match, if one is offered, and then raising contributions by 1% every few months or whenever you get a raise. Many advisors also recommend using tax-advantaged accounts first and setting up automatic contributions so the money never sits in your checking account waiting to be spent. It is also important to build an emergency fund with enough to cover at least three to six months of expenses. After that, depending on your goals, you can consider an IRA, a taxable brokerage account or another savings and investing option.