I Asked ChatGPT How To Retire Rich Making Less Than $100K a Year: Here’s What It Said
Written by
John Schmoll
Edited by
Jenna Klaverweiden
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Earning a six-figure salary isn’t necessary to retire rich. You can retire wealthy, even on a modest income, though it does take commitment and planning.
GOBankingRates asked ChatGPT how to retire rich if you earn under $100,000 annually. Overall, the generative artificial intelligence (AI) tool provided a clear path to attaining a wealthy status, but it emphasized that it all begins with defining what “rich” means to you. Here’s what the chatbot said to do after making your determination.
Also see six things rich retirees do that middle-class ones don’t.
Prioritize Saving Early
Time is vital with investing. This isn’t to say that timing the market is the path to take; rather, having time in the market is the key. Your money has more time to grow, is able to recoup losses and gives you more tolerance for risk.
Don’t let limited funds keep you from investing. “Save 15% to 20% of your income if possible. Even if you can’t start that high, begin with what you can and increase over time,” ChatGPT said. Look no further than your employer-sponsored 401(k) to boost savings. “Take full advantage of employer retirement matches — it’s free money,” the chatbot explained.
Starting even when it feels painful gets you saving earlier, giving your money more time to grow.
Leverage Tax-Advantaged Accounts
Various retirement account types provide tax benefits that are helpful for Americans earning under $100,000. For example, 401(k) contributions occur pretax, reducing your taxable income.
IRAs are also valuable. ChatGPT recommended them for savers. “Opening a Roth IRA or a traditional IRA can be a smart move because it provides valuable tax diversification in retirement. Roths especially benefit those under six figures because you pay taxes now at a lower rate,” ChatGPT said.
If you can focus on low-cost exchange-traded funds (ETFs), this can further enhance efforts. Don’t overlook healthcare costs either, via a health savings account (HSA). “If eligible, it can act as a ‘triple tax-advantaged’ retirement account,” the AI tool noted.
The average retiree can expect to spend over $172,000 in retirement on healthcare costs, according to Fidelity. Using an HSA can complement other retirement saving efforts when working.
Control Spending
Monitoring spending and avoiding unnecessary debt are crucial to achieving a comfortable retirement. Lifestyle creep erodes income, leaving little for wealth-building efforts. “Many people earning under $100,000 still build wealth because they live below their means,” ChatGPT said.
Budgeting is a good way to achieve this. “Track spending and cut wasteful costs. Every extra $200 per month invested could mean hundreds of thousands more in retirement,” the AI noted.
Diversify Income Streams
The average millionaire has seven streams of income, according to Benzinga. ChatGPT recommended following a similar philosophy for Americans earning under $100,00 annually.
“You may want to consider side hustles, freelancing or real estate if they are feasible for your situation. Adding even $500 to $1,000 in extra monthly income and investing it consistently can make a significant difference in your retirement outlook,” ChatGPT explained.
It’s best to identify an opportunity that fits your situation and devote the stream to investing. Use that as a catapult to take advantage of the next possibility.
Take Advantage of Compounding
Warren Buffett famously opines about the power of compound interest, calling it the eighth wonder of the world.
ChatGPT espoused a similar approach, encouraging people to take advantage of compound interest as soon as possible.
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