You Don’t Have to Suffer to Retire Well — 5 Things the ‘Deprivation’ Crowd Gets Wrong

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Kevin O’Leary has some retirement advice making the rounds again: start practicing being poor. “Lose the car. Lose the cable. Maybe even lose the cat,” the Shark Tank star wrote. His logic? “Get used to deprivation before you’re deprived.” (1)

I’ve been a CPA since 1981, with more than four decades of running retirement numbers behind me. I’m also 71, and we have two cats: Jagger and Sargent Pepper. Neither of my fluffy friends is going anywhere — and once you see what the data actually says, I hope yours aren’t either.

Here’s the trouble with “practice deprivation.” It aims at the wrong enemy. O’Leary assumes the great retirement danger is spending too much. For most people, the numbers show the opposite.

About 1 in 3 retirees reach their mid-80s with 100% or more of their savings still sitting there, untouched, according to the Employee Benefit Research Institute. (2) Insurer Allianz found 39% of retirees flat-out refuse to draw down their savings, just to keep the balance high. (3) Morningstar found that retirees with at least median savings consistently spend less than they safely could. (4)

So, the most common mistake isn’t running out of money. It’s being too scared to spend it — dying with a pile of it, after denying yourself years you weren’t getting back.

So yes, O’Leary gets a couple of things right, and I’ll give him credit below. But his headline advice is built on a fear the data doesn’t support. Here are five things he gets wrong.

1. The real retirement danger is underspending, not overspending

The whole “practice deprivation” pitch assumes you’ll blow through your money. The EBRI data says the typical retiree is far more likely to be too scared to spend it. Craig Copeland, who runs wealth research there, said people in their 80s still sitting on everything are being way too conservative. (2)

Here’s why it happens. You spend 40 years training yourself to save. Then you retire, and nobody sends the memo that the job changed. The saving reflex doesn’t switch off — it curdles into fear.

I can personally testify to this. I’m not retired yet (as you can see, since I’m writing this), but I’ve felt the fear of running out, even though my savings are probably larger today than they were 10 years ago.

It’s not easy to spend your entire adult life saving money, then suddenly start spending like a drunken sailor. It’s just not in your DNA.

The cure isn’t more discipline. It’s a number. When you know how much you can spend each year without running out, the fear loses its grip. That’s a math problem, and it’s a solvable one.

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2. ‘Deprivation’ trains the wrong muscle — even millionaires won’t spend

Here’s what O’Leary misses about human nature. If you spend five or 10 years practicing deprivation, you don’t arrive at retirement relaxed and ready to enjoy it. You arrive terrified to spend a dime. You’ve trained the wrong muscle.

Look at who underspends: It’s not just people who are short. Allianz found that even well-off retirees won’t touch their savings. (3) Folks who did everything right still can’t bring themselves to enjoy the result.

If you need to cut to survive in retirement, fine. Do it. But as you do, make sure you’re making your money work as hard for you as you do for it. Every dollar you earn in interest is a dollar you never had to scrimp to save.

One simple thing to do: Switch to a higher-paying bank account.

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3. Where O’Leary’s right: Cut the debt, not the cat

Let me give O’Leary his due, because he’s not wrong about everything. There is one thing worth cutting ruthlessly before retirement, and it isn’t your pet. It’s your debt, especially the high-interest kind.

EBRI’s 2024 spending study found that 68% of retirees who carry debt are carrying credit card balances. (5) That’s the real emergency. A 20%-plus interest rate follows you into retirement and eats the income you were counting on — every month, whether you spend or not.

Cable and the cat cost you a little. A five-figure card balance at today’s rates costs you a fortune. If that’s you, handle the debt first. It’s the one place O’Leary’s “be ruthless” advice actually pays off.

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4. If you’re behind, the answer is more income — not more misery

To be fair, O’Leary’s aiming this at people who are behind, and plenty are. But his own math points somewhere better than deprivation. He says just an extra $5,000 a year can make a difference in your retirement life, and he’s right. (1)

I agree with the target. I just think there’s a happier way to hit it. You can claw $5,000 out of your life by canceling everything you enjoy — or you can bring in $5,000 without surrendering a thing.

A little extra income does what cutting can’t. It adds to your life instead of subtracting from it. And it doesn’t cost you the cat.

There are lots of ways to bring in a little extra cash, both before and after retirement. For example, lots of companies let you earn money by filling out surveys, completing tasks, signing up for stuff, or playing games — stuff you can do while you’re watching TV.

If you want to try something like that, check out Freecash. They boast the fastest payouts (we’re talking instant!), with minimum withdrawals as low as $5. Plus, you can cash out with PayPal, crypto, gift cards — the choice is yours.

According to the company, Freecash users have already earned more than $300,000,000.

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5. Your best spending years are the ones he wants you to skip

Here’s the part that should change how you think about all of this. Your spending naturally falls as you age. Morningstar’s research shows real spending drifts down year after year in retirement — the 70s and 80s cost less than the 60s, not more. (4)

So the years O’Leary wants you to spend rehearsing deprivation are your go-go years — when you’ve still got the health and the energy to enjoy the money. Those years don’t come back. One study found the average 65-year-old spends only about 2% of their savings a year. (6) That’s not prudence. That’s leaving the best part of the trip unopened.

The window to travel, to help the grandkids, to do the thing you always swore you’d do — it’s open now and closing quietly. Deprivation doesn’t protect that window. It wastes it.

The bottom line

I’ll say it as plainly as O’Leary says his part: Save hard, kill your debt, and don’t lean on Social Security to carry you. He’s right about all of that. But “get used to deprivation” is where he loses me.

The goal was never to reach 85 with a big balance and a small life. It was to be able to live. If you’ve done the work, here’s the permission you might be waiting for: It’s okay to spend some of it. On the trip. On the grandkids. On the cat.

Because here’s what my 71 years on this planet have taught me. There are three purposes of money: to meet your needs, to meet some of your wants, and, most important, to make someone smile.

Keep the cat.

Sources: TheStreet (1); CNBC (2); Yahoo Finance (3); Morningstar (4); Employee Benefit Research Institute (5); Kiplinger (6).