In a recent LinkedIn post, Kevin O’Leary outlines a unique approach to funding retirement for smaller nations, drawing parallels to corporate taxation and value-added taxes (VAT). O’Leary suggests that resource-rich countries can leverage the extraction of natural resources to provide for their citizens’ retirement.
He highlights the effectiveness of this model, particularly for countries with smaller populations. According to O’Leary, this system functions as a form of corporate tax, integrated into the national economy. He points out that a royalty on resource extraction can be directed towards retirement provisions.
“This idea really works well for the Nordic countries as well if you have a small population. It’s a form of corporate tax. That’s really what it is. It’s almost like a VAT tax and you build it into the economy.”
Leveraging Resource Royalties for Retirement
O’Leary elaborates on how this mechanism can function in practice. He proposes that when a country imposes a royalty, for instance, around 16% on the extraction of energy or other natural resources, a portion of this revenue can be allocated specifically for retirement funds. This is particularly relevant in resource-rich economies, where the extraction of valuable commodities is a significant economic activity.
He extends this concept to include countries like the United States, suggesting that even in larger economies, a similar allocation from resource extraction could benefit citizens. The key, as O’Leary sees it, is the systematic channeling of these revenues into a dedicated retirement fund.
“Because when any country takes about a 16% royalty on extraction of energy out of the ground, including the United States, if you have a small population, you’re allocating a portion of that towards their retirement.”
Investment and Returns in Retirement Funds
A crucial aspect of O’Leary’s proposal involves the investment strategy for these retirement funds. He emphasizes that the collected funds should be indexed to major market indices, such as the S&P 500. This strategy, he argues, ensures that the retirement assets grow over time, benefiting from the performance of the broader stock market.
O’Leary cites historical market performance as evidence of the viability of this investment approach. He notes the significant returns generated by indices like the S&P 500 over extended periods, suggesting that such growth is essential for sustainable retirement funding. In his view, this market-linked growth provides a robust mechanism for ensuring that retirement funds keep pace with economic expansion and inflation.
“By the way, that money is indexed in the S&P 500. Yeah. Most of the money on Earth, 52 cents of every dollar comes in the S&P every morning at 10 o’clock. We give eight to 12% average per year over 200-year returns.”
Global Economic Interdependence in Retirement Funding
O’Leary concludes by illustrating the interconnectedness of global economies through this financial model. He posits that the economic engine of one nation, like the United States, can effectively contribute to the retirement security of citizens in other countries, such as Australia, through such investment strategies. This perspective underscores his belief in market-driven solutions and the potential for cross-border economic benefits derived from well-managed resource-based retirement funds.
The model proposed by Kevin O’Leary offers a framework for smaller, resource-rich nations to build a sustainable retirement system, capitalizing on natural wealth and leveraging global market performance for the financial well-being of their populations.
📝 About This Content
This article is based on insights shared by Kevin O'Leary on LinkedIn.
📅 Originally posted on December 7, 2025 | View original post on LinkedIn →