Shark Tank's Kevin O'Leary sounds alarm on 401(k) growing problem
Many American workers understand that employer-sponsored 401(k)s are a practical and efficient way to build retirement savings, especially when employers offer matching contributions.
With automatic payroll deductions, they allow workers to invest in their future without much effort.
Kevin O’Leary, an entrepreneur and investor on ABC’s “Shark Tank,” emphasizes the importance of 401(k) plans and the financial discipline required to benefit from them.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💰💵
However, O’Leary also issues a stark warning: Many Americans struggle to contribute meaningfully to their 401(k)s because they spend more than they earn.
He describes the financial anxiety that accompanies the reality of people living paycheck to paycheck, burdened by debt, and clinging to unrealistic hopes of sudden wealth.
In his words, they’re “steeped in magical thinking about money,” believing a lottery win or inheritance will solve everything.
To break this cycle, O’Leary recommends a clear-eyed assessment of one’s finances. He suggests calculating a “90-Day Number” — total income over three months minus total expenses.
Related: Dave Ramsey sends strong message to Americans on Medicare
If the result is positive, it is time to increase 401(k) contributions. If it is negative, that is a wake-up call to cut spending and budget smarter.
Ultimately, O’Leary believes that 401(k) plans are essential, but only effective if individuals take control of their financial habits.
He urges Americans to start making deliberate choices that prioritize long-term security over short-term gratification.
Image source: TheStreet
Kevin O’Leary sounds alarm on 401(k) plans’ and credit card debt
In order to contribute a sufficient amount of one’s income to 401(k) plans, it is of vital importance for Americans to stay away from credit card debt because interest payments hinder the ability to save and invest.
According to the 2025 first-quarter Household Debt and Credit Report from the Federal Reserve Bank of New York, total U.S. household debt rose to $18.2 trillion. Credit card balances alone reached $1.18 trillion, representing an increase of more than 6% compared to the same period the previous year.
O’Leary minces no words in his warning.
“Spending too much is a disease. And credit card debt is a cancer,” O’Leary wrote in his book “Cold Hard Truth on Men, Women and Money.”
“The first time you get a credit card bill and don’t pay off the full balance, it’s as if you’ve allowed the first financial cancer cell into your life,” he added. “The compounding nature of those frightening interest rates is a monstrous thing to behold.”
More on retirement:
- Dave Ramsey offers urgent thoughts about Medicare
- Jean Chatzky shares major statement on Social Security
- Tony Robbins has blunt words on IRAs, 401(k)s
O’Leary argues that credit card companies often justify their high interest rates as a safeguard against fraud or defaults, but in reality, these rates are a core part of their profit model.
He believes the real earnings come from the large segment of consumers who carry a balance month to month and struggle to pay it off entirely.
To O’Leary, this business strategy is incredibly lucrative — companies earning an average 16 percent return are sitting on a financial gold mine. He underscores that if an individual investor saw returns like that consistently, they would go to great lengths to defend it.
In his view, credit card companies do exactly that — protecting and nurturing this high-yield system by keeping credit easy to obtain and encouraging spending behaviors that trap consumers in cycles of debt. It’s not accidental.
And that’s the danger he wants people to wake up to.
Related: Jean Chatzky sends strong message to Americans on Social Security
Kevin O’Leary explains the tragedy of credit card debt and 401(k)s
Social Security monthly paychecks are not enough to live comfortably on in retirement, so investing in 401(k) plans is a major strategy to live a satisfying life after one’s working days are over.
O’Leary believes that the profit incentive for credit card companies does great harm. That significantly applies to people striving to boost their 401(k) plan values.
Credit is widely available by design, O’Leary explains, pulling in overspenders into deep debt cycles where compounding interest outpaces any realistic financial return, trapping them indefinitely.
He makes an analogy to bring the point home.
“The real tragedy, if not the real crime, of personal overspending is that any bartender is legally bound to cut off a dangerously drunk person. But you won’t see that happening in a store,” O’Leary wrote.
“No cashiers at Neiman Marcus or Saks are going to place their hand over your credit card and suggest you don’t really need three pairs of skinny jeans, that one pair will suffice,” he added. “Nope. They’ll congratulate you on your ‘finds’ and reinforce the fact that you ‘deserve to splurge.'”
Related: Tony Robbins sends strong message to Americans on 401(k)s, IRAs
#Shark #Tank039s #Kevin #O039Leary #sounds #alarm #401k #growing #problem
