It is possible to retire a millionaire on an average income, but it requires discipline. While appearing on an episode of “Good Morning America,” “Shark Tank” star Kevin O’Leary answered a question about how much to dedicate to retirement savings.
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A woman named Twyla from New York asked, “What percentage of my salary should I invest in a 401(k)? I’m not sure if I can comfortably hit the recommended amount with my other living expenses.” Here’s what O’Leary advised.
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Contribute 15%, No Matter What
The “magic number” when it comes to retirement contributions is 15% of your income, O’Leary said. And while the woman posing the question said she wasn’t sure she could contribute the recommended amount, O’Leary posited that she could if she prioritized it.
“The number is 15%, and yes, you can [contribute that amount] by [stopping] buying all that crap you don’t need,” he said. “You have to adjust your lifestyle to make sure you put 15% away.”
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The Average American Will Retire a Millionaire by Saving 15%
O’Leary’s advice will make someone earning the average salary a millionaire by the time they retire.
“The average salary in America is $60,000,” he said. “If you invest 15%, you’ll end up with $1.5 million in the bank after a career, because it compounds with market returns of 6% to 8%. And you can do it with anything — all these apps you’ve got that are available out there, fintech apps, you could download and do this. You must invest 15% — minimum.”
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This article originally appeared on GOBankingRates.com: Kevin O’Leary: You Need To Contribute This Much To Your 401(k) To Retire a Millionaire
