Kevin O’Leary has got some retirement advice that isn’t soft or fancy, but it sure will help make your golden years a lot more comfortable.
The weekly number
One of his main pieces of advice has to do with a number. Specifically, the number 100. He says you should try to save $100 a week for an entire year, and that’ll add up to $5,200 in a year. Bear in mind, that’s before any growth.
It’s hardly an exciting number or anything, sure, but it does give you a starting line to work from, and you should begin before you retire. You’ve got no idea how your finances will be once you quit working. Begin with the weekly amount and then keep it moving. Simple as that.
The closet test
O’Leary’s big on people asking themselves annoying questions. The most important one is, ‘Do I actually need it?’ Yes, he says you should ask yourself that question before you buy anything at all. Doesn’t matter that it’s something nice. Doesn’t matter that it’s on sale.
You’ve got to get into the habit of asking yourself about need because, the truth is, your retirement cash isn’t going to disappear in one mistake. It’s going to disappear gradually. Train yourself to ask this question. Then, you’ll find you’re only ever spending on the necessities.
The weekday leak
Daily coffee and lunch. It’s a normal routine for so many people, and they won’t bat an eye over a $7 coffee here and a $40 lunch here. But O’Leary is against that. He knows that nobody feels rich when they pack lunch, and yes, he understands that it can be a little boring.
However, he’s said the same thing again and again. Quit buying daily coffee. Quit going out for lunch. Allowing yourself to indulge in those ‘small’ treats every day of the week sets you up for failure.
The bored feeling
It’s tempting to retire because your work’s become exhausting, sure. O’Leary warns people not to. He’s lived through it himself. In the past, he stepped away after selling his company and later said that he got ridiculously bored afterward. He knows what he’s talking about.
You’re leaving work? You’re leaving the paycheck behind. The routine’s gone, too, and so have the people. So has the reason to have a schedule. Instead of asking yourself whether you can stop, ask yourself what you’re going to do next.Â
The balance that follows
Credit card debt’s one of those annoying things that doesn’t stop following you around. It’s still there during retirement. It shouldn’t be. O’Leary says that you’ve got to make sure you pay off your balance before you even think about retiring.
Any balance you do carry doesn’t care that you’ve retired. Congratulations, your income’s changed. So what? You’ve still got to pay off that balance, no matter whether it’s a car loan or a personal loan. Make life easier. Get those bills reduced before you start your golden years.
The smaller place
O’Leary’s pretty clear about housing. You should keep your mortgage under one-third of your after-tax income. He understands that’s not possible for everyone, of course, and he’s got advice for those people. Sell your home.
If you’re living in a big home that costs you more than a third, then you should look into downsizing. Seriously. It’s not defeat. You’re giving yourself breathing room because, really, a bigger house costs a lot. Taxes? Repairs? Heating? Insurance? It’s way too much.
The rent option
You’d be surprised at how many people seem to think buying a home is the only option. Not O’Leary, though. He argues that it only makes sense to buy when you’re absolutely sure you’re staying there for at least five years. Renting’s a better option otherwise.
O’Leary says you’ve got to figure out what you want to do before you retire. Renting’s really not that bad. It’s more like giving yourself freedom instead of trapping yourself in one location. What’s the better option for you? That’s what O’Leary says you’ve got to work out.
The boring basket
Let’s get one thing straight. O’Leary’s a supporter of retirees investing, although he does have some ideas on what to invest in. He doesn’t think people should stake their whole retirement on one stock. Instead, he recommends putting 15% of your income into the market.
That includes the S&P 500. In other words, he doesn’t think you should put all your trust in a single company that’s doing well, and instead, you should spread it around. Balance that portfolio. Diversify your investments.
The money that moves first
The thing is, it’s way harder to save during your retirement when you’re having to think about it. O’Leary gets that. He recommends that, instead, you should make those retirement savings come out automatically. Turn it into a bill. You know, a bill that comes out like gas and utilities.
Don’t wait until after you’ve paid your ‘real’ bills because there probably won’t be much left. You’ve got to treat retirement savings as a must. Not an option, not as a possibility, but a concrete must.
Sources: Please see here for a complete listing of all sources that were consulted in the preparation of this article.
