Kevin O’Leary’s Clear Warning on Social Security

If you think Social Security will be enough to live on in retirement, you need a Plan B.

Shark Tank investor Kevin O’Leary has been blunt on this point: Social Security was never designed to serve as a sole source of retirement income. With the average monthly benefit for retired workers sitting at roughly $2,071 in early 2026, that reality is hard to dispute. And the program’s long-term outlook has grown more precarious, not less, making a backup plan more urgent than ever.

Social Security May Run Out Sooner Than Expected

The June 2026 Social Security and Medicare Trustees Report delivered a sobering update. The Old-Age and Survivors Insurance (OASI) trust fund, one of the two funds Social Security draws on to pay retirement benefits, is now projected to run dry in the fourth quarter of 2032, one quarter earlier than the first-quarter 2033 estimate in the prior year’s report. At that point, the program would be able to pay only 78% of scheduled retirement benefits, amounting to a roughly 22% cut for every retiree, survivor, and dependent on the rolls.

The accelerated timeline is partly a consequence of the “One Big Beautiful Bill Act” enacted in 2025, which the Bipartisan Policy Center found lowered tax liability for Social Security beneficiaries, reducing trust fund revenue going forward. The Congressional Budget Office takes an even grimmer view, projecting that depletion could trigger an immediate 28% across-the-board cut in the first full year after exhaustion.

Inflation is adding pressure from another direction. Current estimates for the 2027 Cost-of-Living Adjustment (COLA) have narrowed to a range of 3.6% to 3.8%, with AARP projecting 3.6% and the Senior Citizens League forecasting 3.8% after June’s sharper-than-expected drop in consumer prices. That is still a meaningful jump from the 2.8% COLA applied to more than 75 million Social Security and Supplemental Security Income beneficiaries in 2026, and it increases the program’s annual payout obligations. The Senior Citizens League’s 2026 Loss of Buying Power report found that average Social Security benefits have lost roughly 13.7% of their purchasing power since 2010, meaning even regular adjustments have failed to keep pace with retirees’ actual costs. Reduced payroll tax revenues compound the strain. Building your own retirement cushion, rather than counting on Washington to solve the problem, is prudent planning, not pessimism.

So, what does Mr. Wonderful suggest?

First, take personal responsibility and leverage new laws.

O’Leary’s core message is straightforward: stop depending on the government and start building your own retirement through disciplined saving. Under the SECURE 2.0 Act, workers aged 60 to 63 can now take advantage of a “Super Catch-Up” contribution limit of $11,250 for 401(k) plans, pushing the total annual contribution ceiling to $35,750 for those in that age bracket. Workers ages 50 through 59, and 64 and older, are limited to a $8,000 catch-up, so the four-year window between 60 and 63 is especially valuable and often overlooked.

Maxing out tax-advantaged accounts should be the first priority: 401(k)s, IRAs, and health savings accounts each shelter money from taxes in different ways. One important 2026 rule change to know: workers who earned more than $150,000 in FICA wages in the prior year are now required to make catch-up contributions on a Roth (after-tax) basis. If your employer offers a match, contribute at least enough to capture the full amount. An employer that matches up to 6% of your salary is effectively handing you a 6% raise on that portion of your income. Leaving that match uncollected is one of the costliest mistakes a retirement saver can make.

Two, cut expenses aggressively and lose the luxuries.

“Radically cut down on all your expenses. Lose the car. Lose the cable. Maybe even lose the cat. You’re in an emergency,” O’Leary has said. “You have to look at every expenditure with a critical eye and make tough decisions about cash flow. Five to seven years before retirement is the time to practice living frugally. Get used to deprivation before you’re deprived.”

Finance personality Suze Orman has made a similar argument around small daily purchases, famously comparing habitual coffee spending to throwing future wealth away. With the average cup of coffee running about $7 today, a daily habit costs roughly $210 a month and $2,520 a year. Redirected into a Roth IRA at $100 a month over 40 years, Orman argues, that money compounds to around $1 million. The arithmetic is intentionally dramatic, but the underlying point holds: small recurring expenses deserve scrutiny when retirement savings are on the line.

Three, plan seriously for healthcare costs.

O’Leary also emphasizes that retirees routinely underestimate what healthcare will actually cost them. Fidelity’s 2025 Retiree Health Care Cost Estimate puts the expected medical spending for a 65-year-old retiree at $172,500 across retirement, a figure that represents more than a 4% increase over the prior year’s estimate. That number covers Medicare premiums, co-payments, and out-of-pocket costs but excludes long-term care, which can add substantially to the total. For context, the standard Medicare Part B premium alone runs $202.90 per month in 2026, with higher-income retirees paying considerably more through income-related surcharges.

Add in rising prices for food, utilities, and everyday services, and the math shifts quickly against anyone relying entirely on a government benefit check. Healthcare costs have historically grown faster than general inflation, which means the gap between Social Security income and actual retirement expenses is likely to widen over time.

Social Security was never designed to carry anyone across the finish line alone. With a looming trust fund shortfall, potential benefit reductions of 22% or more, and healthcare costs on a persistent upward curve, treating the program as a complete retirement strategy is a risk most households cannot afford to take. The tools to close the gap already exist: disciplined saving, smart use of tax-advantaged accounts, and a hard look at spending habits well before retirement arrives.

Editor’s note: This pass updates the 2027 COLA estimate from the previous “3.8% to 4.7%” range to the current “3.6% to 3.8%” range, reflecting data from AARP and the Senior Citizens League as of July 2026; corrects the average monthly Social Security benefit for retired workers to approximately $2,071 based on SSA data from early 2026; adds context on the Senior Citizens League’s finding that benefits have lost roughly 13.7% of buying power since 2010; and includes the current Medicare Part B monthly premium of $202.90 as a concrete healthcare cost reference.

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