Kevin O’Leary, Mr. Wonderful from Shark Tank, has some retirement advice for you. He says that if you can get $5 million into treasury bills, not stocks, not real estate, not a business, just treasury bills, you have officially made it.

In his words, you have safeguarded your family for the rest of your life. And on the surface, the math seems to back him up. With one-year treasury bills currently yielding right around 4%, a $5 million nest egg would generate roughly $200,000 per year, about $160,000 after taxes with no stock market risk and no state income tax. Most people could live on that comfortably for a very long time.

But when Nick Majuli, friend and author of the popular blog of Dollars and Data, tested this exact strategy using 40 years of real market history, he found that it doesn’t just underperform, it actually falls apart. So in today’s episode, I’m walking you through Nick’s research.

Specifically, I’m sharing the two forces that eventually break the T-bill and chill strategy, what actually happened to a hypothetical investor who followed this advice back in 1987 and the surprising reason Kevin O’Leary might still be right, just not for the reason he thinks.

Welcome to another episode of the Stay Wealthy Retirement Show. I’m your host, Taylor Schulte, and every week I tackle the most important financial topics to help you stay wealthy in retirement. And now onto the episode.

Can $5M in T-Bills Safely Fund Your Retirement? (History Says No)

In a video that made the rounds a few months back, Kevin O’Leary said the following, “I tell everybody this. You should strive very hard if you’re an entrepreneur to have $5 million in treasury bills, not in anything else, just T-bills, making 3.82% this morning. You know you’ve made it and you’ve safeguarded your family for the rest of your life if you can get $5 million liquid in T-bills.” Nick Majouli summed up the philosophy in three words, T-bill and chill, and I think we all get the appeal of it. Treasury bills are backed by the full faith and credit of the US government, which makes them about as close to risk-free as an investment gets. The interest is exempt from state income tax. There are no market crashes to stomach, no headlines to worry about, no 30% drawdowns testing your resolve at two in the morning and the income is real.

At today’s yields, $5 million in T-bills throws off roughly $200,000 a year before taxes. For context, that’s more than triple the median US household income. So if you’ve ever daydreamed about getting to a number, parking it somewhere completely safe and never thinking about the stock market ever again, I want you to know that’s a completely rational thing to want, especially if you’ve lived through 2000, 2008 and 2020 with real money on the line.

In fact, I hear a version of this all the time. Over the last few years as money market and treasury yields climbed back above 4%, it’s not uncommon for someone to ask, “Why don’t we just put everything in treasury bonds and call it a day?” It’s guaranteed, isn’t it? And these aren’t reckless people asking. They’re diligent savers, often folks who’ve built seven-figure, eight-figure portfolios trying to do what feels like the responsible thing, trade uncertainty for a guarantee.

So when an ultra successful investor with a TV platform validates that instinct, it lands. But as Nick points out in his article, there’s a catch and it’s hiding in plain sight. Living off of $200,000 a year right now is not the problem, but living off this strategy later is. And Nick highlights that there are two specific forces working against you.

Let’s go through each of them one at a time.

1.) Force number one is inflation.

Here’s the thing about a portfolio made up entirely of treasury bills. Your principle never grows. When you buy stocks, you own businesses that can raise prices, grow earnings, and compound in value over time. When you buy real estate, you own an asset that tends to appreciate alongside inflation. But when you roll T-bills year after year, you collect your interest and your original investment just sits there. You have $5 million today, you’ll have $5 million in 10 years, you’ll have $5 million in 40 years.

That sounds like stability, but it’s actually erosion because while your $5 million stays frozen, the price of everything you buy with it keeps marching higher. Nick looks at this over a 40-year window and he uses 40 years for a reason. Retirement research suggests that if your plan can survive 40 years, it can likely survive even longer, kind of like the stats about human longevity, which conclude that the longer you live, the longer you live. Now, nobody knows exactly what $5 million will buy 40 years from now, but we do know exactly what it bought 40 years ago. According to the inflation data from the Federal Reserve, having $1.7 million in 1987 was the equivalent of having $5 million today. Let me put that into perspective because I think this is the single most clarifying idea in Nic’s entire article. He takes O’Leary’s advice and simply rewinds it to 1987.

Back then, Mr. Wonderful would’ve been telling you, “You’ve safeguarded your family for the rest of your life if you can get $1.7 million liquid in treasury bills.” And in 1987, that would’ve sounded exactly as reasonable as $5 million sounds today. But here’s what actually happened to the person who followed it. 40 years later, their $1.7 million is still $1.7 million. It’s a lot of money, but it’s not $5 million, which is what they’d need today to match the purchasing power they started with. It’s 66% less. Think about it this way. It’s like working the same job for 40 years and never getting a raise. Your paycheck is never cut. It just buys a little bit les each year. And by year 40, two-thirds of your real pay is gone, even though the number on the check has never changed. If you’re a longtime listener, this might sound familiar.

Back in episode 243, I covered the hidden risk of high-yield cash and the punchline was the same. Over the last 97 years, one month treasury bills have returned about 3% per year on average while inflation averaged roughly the same. In other words, over long periods, cash and T-bills are designed to keep up with inflation at best, not beat it. They preserve dollars, not purchasing power. So that’s force number one. And believe it or not, Nick argues it’s not even the biggest problem.

2.) Force number two is the interest rate rollercoaster.

As Nick puts it, inflation is not the worst part of the strategy, fluctuating treasury rates are. When O’Leary made his comments, T-bills were paying 3.82%. Today they’re paying right around 4%, but that number is not fixed. It’s not a pension. It’s not an annuity contract. It resets constantly based on what the market and the Federal Reserve are doing.

And history shows just how violently it can move. Since the late 1980s, the on – year treasure rate has fallen from nearly 10% all the way down to essentially 0% before climbing back to around 4% in recent years. Your T-bill income goes wherever that rate goes. Your grocery bill does not. To show what this means in real life, Nick runs a simple experiment. Imagine an investor in January of 1987 who takes that inflation-adjusted set for life number. The exact number was 1.66 million, puts it all in one-year T-bills and lives off the interest.

Every January they reinvest at whatever the new rate happens to be. Year one is fantastic. In 1987, T-bills paid about 5.8%. So our investor collects about $96,000 and adjusted for inflation, that’s roughly 289,000 in today’s dollars. Year two is even better. Rates rise to about 7% and they collect about $116,000, around 336,000 in today’s dollars.

So at this point, our investor is feeling pretty smart. No stocks, no stress, and over a quarter million dollars a year in today’s purchasing power. Mr. Wonderful is looking like a genius, but then the rollercoaster tips over the hill. Rates begin their long grinding decline through the 1990s and 2000s and because our investor’s income is 100% tied to those rates, their standard of living declines right along with them.

By 2003, their real income, the inflation-adjusted amount they can actually live on had fallen 85% from its peak. And by 2021, it had fallen 99%. In 2021, the one-year T-bill rate hit 0.1%, which means our investors $1.66 million. The amount that once felt like $5 million generated about $2,100 of income for the entire year. $2,100 in today’s dollars from a portfolio that started out producing the equivalent of more than $300,000 a year. Can you imagine that conversation at the kitchen table going from $300,000 a year to 2,100?

Not because of a market crash, not because of a bad decision, but because the safe asset you parked everything in simply stopped paying. Now I want to be clear here, and Nick is very careful about this too. 1987 was an unusually generous starting point. Back then, T-bills paid a couple of percentage points above inflation. By 2021, they paid far below it. So part of this dramatic decline is about starting the clock at a high watermark, but that’s exactly the point. Real yields, what T-bills pay you above and beyond inflation swing wildly over time and you have zero control where they go during your retirement.

Sometimes the rollercoaster starts at the top. You don’t get to choose. And here’s where the whole thing unravels logically. You might be thinking, fine, when rates drop, just sell some T-bills to cover the income gap. And sure, you could, but the moment you start spending down principle, you’ve abandoned the entire strategy.

Now you’re doing exactly what T-Bill and Chill promised you would never have to do, worrying about withdrawal rates, sequencing, and whether the money runs out before you do. As Nick writes, “Once you start selling down your capital, you have no longer safeguarded your family for the rest of your life,” which was the entire promise to begin with. So the honest verdict on the strategy is this. $5 million in T-bills is a phenomenal emergency backstop, but if inflation ramps up or rates fall off a cliff, both of which have happened repeatedly within living memory, T-bills alone will not save you.

That’s the bad news, but Nick’s article doesn’t end there. After spending the entire article dismantling the math behind T-bill and chill, Nick arrives at a conclusion that sounds almost contradictory. It doesn’t really matter. Why? Because, and I love this line, “The type of person who can save $5 million in T-bills is not the type of person who is going to have financial issues.” I’ll say that again.

The type of person who can save $5 million in T-bills is not the type of person who is going to have financial issues. Think about what it actually takes to get there. Only about 4% of US households across all ages have a net worth of $5 million or more according to the latest data.

Accumulating that kind of wealth in cash, liquid, on purpose requires decades of earning, saving, restraint, and follow through. It requires spending less than you make for a very long time and resisting every shiny object along the way. In other words, getting to $5 million in T-bills demonstrates extraordinary financial discipline. This is the exact line worth remembering from the whole piece. “It is this discipline that is the real asset, not the $5 million. Because when the strategy inevitably hits turbulence, when rates collapse or inflation surges or life throws a curveball, the spreadsheet didn’t include discipline people adapt.

They trim their spending, they adjust their investments, they pick up some work they enjoy. The money, as Nic says, comes and goes in a variety of ways. But people who know how to acquire money and hold onto it are rarely the ones who end up in real financial trouble. So Kevin O’Leary is right, but for the wrong reason.

Yes, $5 million in T-bills probably is enough for life, not because of the T-bills, but because of the person who built it. Now, let’s bring this down from $5 million in Shark Tank soundbites to your actual retirement plan, because I think there are three practical takeaways here.

1.) Number one, give every dollar a job and don’t ask safe assets to do a growth assets job. Cash, T-bills, money markets, short-term bonds. These are wonderful tools for the money you need to keep safe. On this show, we call that your war chest. Depending on your risk tolerance, this represents somewhere between two to five years of living expenses held in cash and high-quality bonds so that when stocks go through their inevitable rough stretch, you’re never forced to sell them at the bottom. But your war chest has a specific job, stability. It’s not the engine of your plan. The engine, the part responsible for funding year 15, year 25, year 35 of your retirement has to earn a real return above inflation. And over the long run, that means owning some amount of stocks or other growth assets sized appropriately for your plan.

2.) Number two, be suspicious of any strategy whose entire case rests on today’s yields. T-Bill and chill sounds brilliant at 4%. It sounded brilliant at 5.8% in 1987 as well. The lesson from Nick’s research is not that today’s yields are bad, it’s that they’re temporary. Locking a 30-plus year retirement to a rate that resets every 12 months is not safety.

It’s a bet on interest rates. It just doesn’t feel like one. Compare that to how a durable retirement income plan actually gets built. Social security, that’s inflation adjusted for life, a diversified portfolio designed to grow your purchasing power over decades, and a war chest to bridge the rough patches. None of those pieces depends on where the one-year treasury happens to be trading in January.

3.) And finally, number three, remember that no single number makes you set for life. Not $5 million, not $10 million, not any number. What actually sets you up for life is a plan that can adapt, one that coordinates your income, your taxes, your investments, and your spending, and that flexes when the world changes. The retirees I see thrive are not the ones who found the perfect asset. They’re the ones with the discipline to follow a process and the flexibility to adjust it, which funny enough is exactly Nic’s conclusion.

The discipline is the asset. So to bring us home, here’s what I would encourage you to ask about your own plan over the coming weeks and months. Does every dollar in your portfolio have a clearly defined job? If interest rates fell to 1% next year, would your income plan still hold up? Is your war chest full? And is the growth side of your plan actually positioned to meet your retirement income goals and combat inflation over the next 30 plus years? If you can’t answer those questions confidently yet, that’s not a reason to panic. It’s just a sign that there’s some work worth doing. And if part of you still craves the simplicity of parking everything somewhere safe and never looking at the market again, just know that instinct is not foolish. It’s human. What you’re really craving is not T-bills, it’s confidence, and confidence doesn’t come from a single asset or a magic number.

It comes from knowing every piece of your financial life is working together and that your plan can bend without breaking. That’s something no yield, 3.82%, 4%, or 10% can give you on its own. Thank you as always for listening. And once again, to view the research and resources supporting this episode, including a link to Nick’s wonderfully written article, just head over to ustaywealthy.com/293.