Kevin O'Leary explained how you can live off $500K and ‘do nothing else to make money' — but is it realistic for your retirement?

Kevin O'Leary explained how you can live off $500K and ‘do nothing else to make money' — but is it realistic for your retirement?
Kevin O'Leary explained how you can live off $500K and ‘do nothing else to make money' — but is it realistic for your retirement?

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How much money is enough?

According to entrepreneur Kevin O’Leary, it really depends on your lifestyle and how you invest your funds.

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“Do not invest in your brother’s restaurant,” he warned in an interview posted to his official YouTube channel.

“Or a bowling alley, or a bar, or all that other crap. You’ll lose your money.” Instead, O’Leary believes a person could survive relatively comfortably on just $500,000 in the bank and “do nothing else to make money” — provided that $500,000 is invested correctly.

Here’s a closer look at his thesis and whether it’s actually realistic for most people, particularly when thinking about their retirement.

O’Leary’s thesis

Half a million dollars doesn’t seem like a lot of money these days. In fact, it’s less than half the amount Americans say they need to retire. The latest Northwestern Mutual study found that U.S. adults were on average targeting $1.46 million to retire comfortably. So, O’Leary’s number already sounds paltry.

Nevertheless, he believes the right investment can deliver a reasonable retirement. A typical saver, he says, can generate 5% returns in fixed income securities with “very little risk”, or between 8.5% and 9% “if you put some of it in equities and are willing to ride the volatility.”

Those numbers certainly look realistic. The yield on a 10-year U.S. Treasury bond is 4.55%, while the S&P has delivered average annual returns of around 11% over the last 40 years, assuming you reinvested all your dividends.

But living off 4.5% yield on half a million wouldn’t be easy. That translates to just $22,500 in annual income, about a quarter of which would go towards medical expenses alone as you get older, according to a study by RBC Wealth Management.

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Even the upper-end of O’Leary’s assumptions falls short. Assuming a person deploys $500,000 in a portfolio made up of stocks and bonds for 9% annual returns, they would earn less than $50,000 a year. Simply put, O’Leary’s proposal isn't feasible for the vast majority of people.

If the goal is to be comfortable in retirement, the “4% rule” is a popular guideline. It says that retirees can safely withdraw 4% from their retirement funds every year over a period of 30 years. Every year after the first year they would have to adjust the dollar amount to account for inflation. Created by financial adviser Bill Bengen, it’s based on analysis of historical returns and volatility of bonds and stocks. It's assumed retirees won't outlive their money if they spend this way.

Critical spending and saving

By spending and saving smartly, you can support a healthy retirement without having to stick to O’Leary’s rules.

A Gold IRA is a great alternative investment to protect and grow your nest egg. Unlike the U.S. dollar, which has lost 98% of its purchasing power since 1971, gold’s purchasing power remains stable over time.

With the help of Goldco — an industry leader in precious metals, offering physical delivery of gold, silver and platinum — you can open a gold IRA and preserve your retirement with an inflation-resistant asset.

Of course, while saving for retirement is essential, there are also essential purchases anyone needs to make.

Luckily with Acorns — an automated investing and saving platform — you can make essential spending an opportunity for savings.

All you have to do is link your bank account to the app and spend as you normally would. Acorns automatically rounds up the price to the nearest dollar and deposits the difference into a smart investment portfolio for you, allowing you to grow your wealth without even thinking about it.

Sign up now and get a $20 bonus investment.

Consult a professional

If you’re feeling overwhelmed by all of the contradicting advice from financial gurus like O’Leary, it could be the right time to get in touch with a financial advisor through to help you build a plan for your financial future. is an online platform that matches you with vetted financial advisors suited to your unique needs.

Once you’re matched with an advisor, you can book a free consultation with no obligation to hire.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.