Kevin O'Leary Says You Can Survive On $500,000 And 'Don't Have To Do Anything Else To Make Money'

Americans are crazy about that $1.5 million nest egg for their retirement: they want to live a comfortable life with golf trips and expensive cars.

But Kevin O'Leary, the tough guy from “Shark Tank,” says you'll have to wait a little longer: You can retire with just $500,000. That's a far cry from the $5 million he proposed last August.

According to Mr. Wonderful, it's important to invest wisely and perhaps cut back on your spending after you quit for good.

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“You can live on half a million dollars in the bank and do nothing else to make money,” O'Leary said. “Don't invest in your brother's bar. Or a bowling alley, or a bar, or any of that crap, you'll lose your money.”

But it depends on the type of lifestyle you want. According to research from Northwestern Mutual, most Americans think they’ll need nearly $1.5 million to retire. That’s up 53% from 2020 and 15% from last year.

O'Leary's logic is that you can earn about 5% in steady income with little risk, but if you only have $500,000, that works out to $25,000 a year. If you're willing to brave the volatility, you can invest in stocks, which yield up to 9% returns, or about $45,000 a year.

If you’re looking to retire safely, the 4% rule is widely used. The rule states that retirees can withdraw 4% of their retirement savings each year for 30 years, with the amount adjusted each year to keep up with inflation. Developed by financial advisor Bill Bengen, the rule is based on historical data on stock and bond returns, with the goal of ensuring that retirees don’t run out of money.

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Consider real-world spending. According to the Bureau of Labor Statistics, the average retiree aged 65 and older spends about $52,141 per year. Rounding things up, you’d need to have saved at least $1.3 million to generate $53,000 per year using the 4% rule. That means if you had $500,000 saved, as O’Leary suggested, withdrawing 4% per year for 30 years would only yield a safe spending limit of $20,000 per year.

Regardless of how much money you have saved for retirement, it can be important to consult a financial advisor to achieve your financial goals. A financial advisor can provide you with tailored advice that fits your circumstances, aspirations and risk tolerance. Whether you are building an emergency fund, planning for retirement, investing in the stock market or saving for a home, a financial advisor can help you navigate the complexities of financial planning so you can be sure you are on the right path to achieving your personal version of financial success.

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This article Kevin O'Leary Says You Can Survive On $500,000 And 'Don't Have To Do Anything Else To Make Money' originally appeared on Benzinga.com