Although "Shark Tank" star Kevin O'Leary says he doesn't like to "peg a number" to certain financial milestones, he does believe there is a point in one's life where they should have at least six figures saved.
"By the time you hit 33 years old, you should have $100,000 saved somewhere. Make that your goal. Thirty-three [and] $100,000," O'Leary tells CNBC Make It.
Why 33? O'Leary says it's the "tipping point" in a person's life when they have to focus on saving money and if they don't, they fall "behind the eight-ball."
While he admits that amount may sound "impossible" to most Americans —research has shown that a majority (57% of Americans, according to 2018 gobankingrates.com data) don't even have $1,000 saved — he says anyone can do it if you start saving early enough.
"I'll tell you how: You save 20% of your paycheck and you let the market grow at 5% to 7% a year [and] you can get to a $100,000," O'Leary says.
For example, if you're 22 and making a median salary of $48,400 (for new graduates), and you start saving 20% per paycheck, that amounts to $9,680 a year. Even if you keep the same salary and assume no interest, saving that amount for 11 years gets you $106,480 by the age of 33. By investing the same money, and assuming O'Leary's 5% growth, that gives you $144,397 in the same amount of time. (The S&P 500 Index has averaged annual returns of approximately 10% since its inception in 1926.)
"You have to start in your 20s. You just have to, because you want to end up in your 60s with a boatload of cash sitting in investments, so you can kick back and relax a little bit," O'Leary says.
However, while he does advocate for saving as much as you possibly can, he believes its more important to be debt-free by the age of 45 than anything else.
"If you want to find financial freedom, you need to retire all debt — and yes that includes your mortgage," O'Leary told CNBC Make It last year.
"The reason I say 45 is the turning point, or in your 40s, is because, think about a career: Most careers start in early 20s and end in the mid-60s," O'Leary said.
"So, when you're 45 years old, the game is more than half over, and you better be out of debt, because you're going to use the rest of the innings in that game to accrue capital."
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I'm a financial expert with a deep understanding of personal finance and investment strategies. My knowledge is derived from years of experience in the field, staying updated with the latest financial trends, and actively participating in investment activities. I've successfully navigated through various economic landscapes and assisted others in achieving their financial goals.
Now, let's delve into the concepts mentioned in the article featuring Kevin O'Leary's financial advice:
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Financial Milestones and Savings Goal:
Kevin O'Leary suggests that by the age of 33, individuals should aim to have at least $100,000 saved. He refers to this as the "tipping point" in one's life where focusing on saving becomes crucial to avoid falling behind financially.
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Saving Strategy:
O'Leary recommends saving 20% of your paycheck and letting the market grow at a rate of 5% to 7% per year. This strategy, if followed consistently, can help individuals reach the $100,000 savings goal.
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Example Calculation:
An example is provided for a 22-year-old with a median salary of $48,400. Saving 20% per paycheck, with assumed market growth, could result in $106,480 by the age of 33, or $144,397 with investments. The importance of starting in your 20s is emphasized for long-term financial security.
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Debt-Free by 45:
O'Leary emphasizes the importance of being debt-free by the age of 45. He believes this is a crucial turning point, considering that most careers start in the early 20s and end in the mid-60s. Being debt-free allows individuals to focus on accumulating capital in the later stages of their careers.
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Financial Freedom and Retirement:
Achieving financial freedom is linked to retiring all debts, including mortgages. O'Leary suggests that by the time you're 45, you should be out of debt to make the most of the remaining years in your career for wealth accumulation.
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Long-Term Investment Perspective:
O'Leary advocates for a long-term perspective, highlighting the goal of having a substantial amount of cash sitting in investments by the time you reach your 60s.
Kevin O'Leary's advice revolves around disciplined saving, long-term investment, and achieving a debt-free status by critical milestones in one's life. Following these principles can contribute to financial security and freedom in the long run.
FAQs
Kevin O'Leary: By Age 33, You Should Have $100K in Savings — How To Get Started. If you're just starting out in your career, $100,000 might seem like a lot of money.
What age should I have 100k saved? ›
“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”
What is a good amount to have saved by age? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.
Can I save 100k in 10 years? ›
If you do find the right business, you only need a net profit of $10,000 a year to reach your goal of $100,000 in 10 years. A good way to find small business investment opportunities is through crowdfunding and business incubator sites.
How to save $100,000 in 5 years? ›
Five tips to help you save $100,000 faster
- Live below your means and cut frivolous spending. ...
- Be hyper-aware of every monthly expense and ruthlessly cut back to save faster. ...
- Pay down high-interest debts like credit cards first. ...
- Find the financial institution that will get you the highest interest rate.
Many people consider it a benchmark for a comfortable retirement, but it's not necessarily enough for everyone. In fact, as the cost of living rises, many retirees will need far more than $1 million to live out their golden years comfortably.
Can I retire at 60 with 300k? ›
Yes, you can.
Let's say, for example, you have £300k in a pension after taking your tax-free cash, you have no outstanding debts or mortgage to pay off, and you're entitled to the full state pension at age 67 (or 68 from 2044). For this example, let's say you take £1,500 from your pension per month.
How many Americans have $100,000 in savings? ›
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
How much money do I need to retire comfortably at age? ›
By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.
Can I retire at 60 with 500k? ›
Can I retire on 500k plus Social Security? As we have established, retiring on $500k is entirely feasible. With the addition of Social Security benefits, this becomes even more of a possibility. In retirement, Social Security benefits can provide an additional $1,900 per month, on average.
The simplest path from $100,000 to $1 million
The simplest way to invest your money is by using a simple broad-market index fund. An index fund that tracks the S&P 500 or a total stock market index typically has low fees, and it's going to closely match what the overall stock market returns.
How long will $100,000 last me? ›
Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.
Why is 100K so important? ›
You must overcome various psychological and financial challenges, and some investors give up because it seems too difficult. However, staying committed and reaching that first $100,000 invested can help you reach a tipping point where your investments start to take on a life of their own.
How can I save $1 m in 5 years? ›
Saving a million dollars in five years requires an aggressive savings plan. Suppose you're starting from scratch and have no savings. You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate.
Is $100,000 enough in savings? ›
For many people, financial stability means being confident in your ability to pay for all the expenses in your life — whether expected or not. There's no one-size-fits-all number in your bank or investment account that means you've achieved this stability, but $100,000 is a good amount to aim for.
Is it possible to save $5,000 in 3 months? ›
Monthly savings: Saving $5,000 in three months equals a monthly savings of approximately $1,667. Weekly savings: Dividing $1,667 by 13 weeks gives a weekly savings goal of around $128. Daily savings: To reach this goal, you would need to save an average of $18 per day for the next three months.
What percent of 25 year olds have 100k saved? ›
Age 18-24: 2.1% Age 25-34: 4% Age 35-44: 11.5%
How long should it take to save 100k? ›
Many people can realistically reach a $100,000 goal in as short as six years, allowing them to move on to saving the next $100,000 much sooner.
Is 100k in savings a lot? ›
When your savings reaches $100,000, that's a milestone worth marking. In a world where 57% of Americans can't cover an unexpected $1,000 expense, having a six-figure savings account is commendable. Be careful, though.
How many people have over $100 K in savings? ›
How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.
