Why $5 million in Treasury bills may not be as safe as it sounds

Kevin O’Leary’s claim that entrepreneurs should aim for $5 million in Treasury bills has revived a practical retirement question: can cash-like government debt carry a household for life? For everyday investors, the appeal is clear: a Treasury bill is short-term U.S. government debt, but the income can shrink when rates fall and inflation erodes buying power.

O’Leary, the investor and television personality known as “Mr. Wonderful,” argued in a YouTube video that entrepreneurs should try to hold $5 million in T-bills and nothing else. He said that amount, if kept liquid in Treasury bills, would mean a family had been protected for the rest of its life.

The math looks comfortable at today’s rates. According to Treasury yield data cited by Of Dollars and Data, one-year U.S. Treasury bills are yielding about 4%. At that level, $5 million would produce roughly $200,000 a year before tax, or about $160,000 after tax, and Treasury interest is exempt from state income tax.

That makes the strategy easy to understand. A saver lends money to the U.S. government for a short period, collects interest, and then rolls the money into new bills as they mature. The risk highlighted by Of Dollars and Data is that the principal does not grow if the investor spends all the interest.

Inflation changes what $5 million means

Of Dollars and Data argues that the first pressure point is inflation, which is the rise in prices over time. The analysis uses a 40-year horizon, citing research that portfolios lasting 40 years are likely to last longer.

In its example, $1.66 million in 1987 had the same buying power as $5 million in 2026. Put another way, a person in 1987 could have felt similarly secure with $1.66 million in Treasury bills, but that same nominal amount would still be $1.66 million today.

At current yields near 4%, Of Dollars and Data says $1.66 million in T-bills would generate about $66,000 a year, far below the roughly $200,000 generated by $5 million. The issue is not whether $5 million is a large sum today. The issue is whether a fixed pile of short-term debt can keep pace with future living costs.

Rate swings are the bigger problem

The analysis says fluctuating Treasury rates create an even sharper risk. Since the late 1980s, the one-year U.S. Treasury rate fell from nearly 10% to roughly 0% before climbing back to around 4% in recent years, according to the data cited by Of Dollars and Data.

To show the effect, the analysis models a saver who started in 1987 with $1.66 million, bought one-year T-bills each January, and lived on the annual interest. In January 1987, a 5.78% rate would have produced about $95,950 in nominal income, equal to $288,925 in 2026 dollars. In January 1988, a 6.99% rate would have produced about $116,000, or $335,856 in 2026 dollars.

By 2003, the saver’s inflation-adjusted income would have fallen 85%, according to Of Dollars and Data. By 2021, it would have fallen 99%, with $1.66 million in T-bills producing only $2,136 in 2026 dollars because the one-year T-bill rate was 0.1%.

The analysis acknowledges that 1987 was an unusually strong starting point for real yields, meaning yields after adjusting for inflation. Still, it argues that the core weakness remains: real yields can change sharply, and a household relying only on T-bill interest may see income fall just when expenses keep rising.

A saver could sell some T-bills to cover the gap, but Of Dollars and Data says that changes the strategy. Once principal is being spent, the investor has to consider withdrawal rates and the possibility of outliving the portfolio.

The discipline angle

Of Dollars and Data also notes that reaching $5 million is rare. Based on the latest data it cites, only 4% of U.S. households across all ages have a net worth of at least that amount.

Its conclusion is that the discipline required to accumulate $5 million may matter more than the T-bill strategy itself. A person who saves that much may also be able to cut spending, change investments, or return to work if conditions shift. That is a different kind of security than relying on one short-term government debt strategy to fund a lifetime.

This story draws on original reporting from Of Dollars and Data.