“Shark Tank” star and entrepreneur Kevin O’Leary has built a reputation for no-nonsense financial advice, and when it comes to retirement planning, his guidance could be the difference between financial security and disaster.
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With retirement costs continuing to rise, O’Leary’s practical strategies offer a roadmap to avoid common pitfalls that derail many Americans’ golden years.
Follow the 15% Retirement Contribution Rule
The “magic number” when it comes to retirement contributions is 15% of your income, O’Leary said, per Yahoo Finance. This consistent approach forms the foundation of his retirement strategy, emphasizing that regular contributions over time can help build substantial wealth for retirement.
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Don’t Panic About Market Volatility
O’Leary advocates for a steady approach during market turbulence. He pointed out that riding the volatility of the market and investing in a slightly riskier security could amount to more gains.
For example, investing in an index fund could result in a better return and keep risks to a minimum, again according to Yahoo Finance. Rather than making emotional decisions during market downturns, he suggests maintaining a disciplined investment approach.
Eliminate Debt Before Retirement
O’Leary is adamant about debt elimination, particularly credit card debt which carries high interest rates. “Pay off [your] credit cards immediately, that’s what [you] should do,” he told Fox Business. He emphasizes that carrying debt into retirement can be financially devastating, as fixed incomes make it much harder to manage debt payments.
Build an Emergency Fund First
Before focusing on retirement investments, O’Leary recommends building a solid emergency fund. He specifically suggests saving three months’ worth of salary for emergencies. This creates a safety net without tying up too much money in low-interest savings accounts, allowing the majority of your money to work harder in investments.
Cut Unnecessary Spending
O’Leary advocates for taking a hard look at spending habits and eliminating unnecessary purchases. This approach frees up more money that can be redirected toward retirement savings and investments.
The beauty of O’Leary’s approach lies in its accessibility and practicality. His strategies don’t require complex financial knowledge or massive starting capital — just discipline and consistency. By following these five principles, retirees can build a solid foundation that protects against the financial disasters that derail many retirement plans.
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This article originally appeared on GOBankingRates.com: Kevin O’Leary’s Top 5 Tips That Will Save Retirees from Financial Disaster
