# Kevin O'Leary on the Money Mistake That Derails Financial Plans
Kevin O'Leary, the Shark Tank investor and personal finance personality, warns that taking money from retirement accounts before retirement age represents one of the quickest ways people sabotage their long-term wealth.
The core problem: Early withdrawal from retirement accounts like 401(k)s and IRAs triggers immediate taxes and penalties that consume a chunk of your savings right away. The IRS typically levies a 10% early withdrawal penalty on distributions taken before age 59.5, plus you owe income tax on the withdrawn amount. That double hit means taking out $10,000 might cost you $2,500 or more in taxes and penalties combined.
But the real damage runs deeper. Money withdrawn early stops compounding. A $10,000 withdrawal at age 35 loses decades of growth. Invested at a modest 7% annual return, that $10,000 becomes roughly $76,000 by age 65. By raiding your retirement account, you forfeit not just the original amount but all that future growth.
O'Leary's language—"you killed it"—captures how final this mistake feels. Once money leaves a retirement account, it's gone from your retirement savings permanently. The contribution limits mean you cannot make up that lost space.
People tap retirement accounts for legitimate emergencies: medical bills, job loss, home repairs. But many raid these accounts for lifestyle spending, thinking they will replace the money later. They rarely do.
The better move: Exhaust other options first. Build an emergency fund with three to six months of expenses in a regular savings account. Use a 0% introductory credit card for short-term needs. Take a personal loan if necessary. Borrow from your 401(k) if it allows loans, rather than