Kevin O'Leary warns that Social Security, which replaces roughly 40 percent of the average worker's pre-retirement earnings, was never designed to fully fund retirement and should be treated as a supplement to personal savings rather than a primary income source.
The average retired worker's Social Security check of about $2,084 per month replaces roughly 40 percent of pre-retirement earnings, a gap Kevin O'Leary says pushes retirees who depend on the program toward what he calls a "poverty-level retirement."
"That check was never designed to fully support retirees," O'Leary, chairman of O'Shares ETFs and a "Shark Tank" investor, said. The Social Security Administration estimates benefits replace about 40 percent of the average worker's pre-retirement income, while many financial planners recommend retirees need closer to 70 percent to maintain their standard of living.
The shortfall compounds for workers who exit the workforce early. Social Security calculates benefits using the 35 highest-earning years, so leaving early can lock in lower-earning years or zeros in that formula. Claiming before full retirement age also permanently reduces monthly payments. For anyone born in 1960 or later, claiming at 62 instead of waiting until the full retirement age of 67 locks in a 30 percent reduction for life, while delaying past 67 adds 8 percent per year through age 70.
O'Leary is equally direct about retirement timing. "Don't retire until you can afford it," he said. "Throw out your plan for freedom at 55 or even 65. If you have debt, you need your job, so you have to do everything in your power to keep it."
The stakes are measurable for early retirees. A $4 million portfolio at a 4 percent withdrawal rate generates roughly $160,000 annually, but Morningstar's "State of Retirement Income: 2025 Edition," published in December 2025, identified 3.9 percent as the safe starting withdrawal rate for a 30-year horizon with a 20 to 50 percent equity allocation. Someone retiring at 55 faces a 35 to 40-year horizon, which argues for a more conservative draw from the start.
Healthcare represents the biggest budget wildcard in the gap years before Medicare eligibility begins at 65. For a high-income early retiree, marketplace coverage can run several hundred dollars a month per person before deductibles and out-of-pocket costs, making it a line item that deserves dedicated allocation in any retirement budget model.
O'Leary also pushes back on the assumption that retirement requires matching a current lifestyle dollar for dollar. "First of all, you need less than you'd imagine, and panicking helps nothing," he said. Commuting, work clothes, and daily job-related expenses disappear, lowering the baseline cost of living. "If you're healthy and happy, being old is cheap," he said.
His prescription is straightforward: "Start your journey toward financial freedom today by taking three steps: spend less, save more, invest the rest." For growth, he points to the stock market, noting that a diversified portfolio has rewarded consistent investors over decades despite short-term fluctuations.
The more assets built outside Social Security, the less pressure the monthly benefit carries to cover housing, health care, and other essentials. O'Leary's view is blunt but not alarmist — the program was never designed to replace a full paycheck, undo years of limited savings, or fund the lifestyle many people picture for a stress-free retirement.
That puts the responsibility back on individual decisions. It may mean working a little longer, cutting back now, or investing more consistently. Retirement ultimately rests on the assets you accumulate, with Social Security serving as a supplement rather than the foundation. Readers should verify current benefit amounts and claiming rules against the latest Social Security Administration announcements, as figures cited here reflect data available as of June 2026.
This article is for informational purposes only and does not constitute professional advice.
