Most people have a number in mind—the amount of money they think would be enough to quit working and live life on their terms. For Kevin O'Leary, that number isn't just a guess. It's precise: $5 million in liquid cash.
"You have to get to a place where you have $5 million in the bank," O'Leary said in a 2023 YouTube video. Not in real estate. Not in stocks. Cold, hard cash.
He doubled down on that number in a December interview with Financial Post, when asked if he still stood by the claim. His answer? A firm yes.
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"It's the minimum, and it's very, very, very hard to get," O'Leary said. But according to him, that's what it takes to stop answering to anyone—to have the kind of financial security where work becomes a choice, not a necessity.
Why $5 Million?
O'Leary's calculation is based on passive income, as he explains in the YouTube video. He assumes that with $5 million generating a 6% to 7% return, you'll pull in $300,000 to $350,000 a year. That's way beyond the median household income of $74,580, meaning it should be enough to cover living expenses without ever touching the principal.
"When you make that, you set it aside and don't risk it," O'Leary explained. "Then after that, you can take risk capital and put it to work."
The idea is simple: If you never dip into your $5 million, it becomes a permanent safety net. You can take financial risks elsewhere—investments, businesses, or passion projects—but you'll always have that guaranteed income rolling in.
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Is His Math Too Optimistic?
Some financial experts might find O'Leary's 6% to 7% return assumption a little too optimistic, especially given how markets fluctuate.
According to CNBC, Goldman Sachs forecasts that the S&P 500 will deliver an annualized nominal total return of only 3% over the next decade, a significant drop from the 13% returns of the past decade and the long-term average of 11%.
While his numbers aren't necessarily unrealistic, they require higher-risk investments or exceptionally strong returns.
Retirement Freedom vs. Financial Freedom
O'Leary is talking about personal freedom—the ability to step away from work and still live comfortably. But when it comes to retirement planning, some experts argue that even $5 million may not be enough, especially for early retirees.
For example, Suze Orman warns that people grossly underestimate how much they'll need to retire early, often overlooking rising healthcare costs and inflation. She suggests that $10 million or more is a safer target for those wanting to stop working entirely and never worry about money again.
Meanwhile, Grant Cardone takes a different approach. He focuses on building passive income streams through investments, suggesting that $5 million generating a 5% return could provide $20,000 per month—enough for a comfortable lifestyle, depending on spending habits.
What If You Hit $5 Million by 40?
Let's say you reach O'Leary's target by age 40. If you stick to his plan, living only off the interest, that's $300,000+ per year without touching the principal.
Sounds like a dream scenario, right? But here's the catch: inflation, lifestyle creep, and unexpected costs could eat into that number over time. Even with $5 million in the bank, financial discipline would still be key.
So, Is $5 Million the Right Goal?
O'Leary's logic makes sense—if you can achieve the returns he assumes. But the real takeaway isn't about a specific dollar amount. It's about the freedom that comes from having enough money to stop working and start living on your own terms.
For some, that number might be $5 million. For others, $10 million. The key is to build wealth in a way that lets you say no to anything you don't want to do. And in the end, that's what financial freedom is really about.
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