I Asked ChatGPT How To Retire Early on a Middle-Class Salary: Here’s What It Said

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There’s no one right way to prepare for retirement. Where you live, the money you make, the kind of lifestyle you want and your timeline should all factor into your overall retirement plan.

So, what if you’re currently earning a middle-class income and you want to retire early? GOBankingRates asked ChatGPT how to make it happen. These are the seven steps it provided, and what to consider as you go along.

Define ‘Early Retirement’

The first step, according to ChatGPT, is to determine what “early retirement” means to you.

The average U.S. retirement age is 62, as per a 2024 MassMutual Retirement Happiness Survey. This is also when most people can start collecting Social Security.

But when do you want to retire? Is it when you’re 45 or 50? Are you hoping to be done with the workforce even sooner than that?

ChatGPT also suggested asking yourself things like:

• Do you plan to work part-time or as a consultant in retirement?
• Are you quitting altogether?

Calculate the Numbers

A middle-class salary is between two-thirds and double the national median household income, according to Pew Research Center. In 2024, the U.S. Census Bureau found that the real median household income was $83,730.

This means you could be considered middle class if you earn between $55,820 and $167,460. That’s a significant difference.

ChatGPT suggested calculating the numbers, like:

• How much you’ll need annually when you retire. Fidelity estimates you’ll need between 55% and 80% of your current salary once you retire.
• Your anticipated expenses: You can use your current spending as a baseline. The AI tool also noted that some expenses might be lower — like transportation. But be sure to account for things like insurance, long-term care, inflation and taxes.

According to the AI, you should also set a savings target using the 4% rule. Essentially, you can withdraw up to 4% of your retirement portfolio each year (adjusted for inflation). If you have $1 million in retirement savings, you can withdraw up to $40,000 in the first year. Assuming a 2% annual inflation rate, you can withdraw $40,800 in the second year, and so on.

Maximize Your Savings

Fidelity suggests saving 15% of your annual income for retirement. But if you want to retire early, ChatGPT’s advice is to save 30% to 50%. Here’s how:

• Live below your means
• Increase your income
• Automate your savings

Know that these options might not be viable for everyone. You may also have to adjust your strategy as you go.

Invest Aggressively and Smartly

ChatGPT emphasized the importance of investing aggressively to combat inflation and grow your wealth. Options include:

• 401(k) or 403(b) accounts with employer match
• IRAs
• Health Savings Accounts
• Backdoor Roth (if your income exceeds the Roth IRA limits)

Once you’ve maxed out these accounts, the AI suggested then using a taxable brokerage account or low-fee index funds or exchange-traded funds (ETFs). It further suggested dollar-cost averaging as a way to invest consistently and wisely.

While the general advice is solid, there are some possible drawbacks. In particular, you might not have sufficient funds to max out your retirement accounts on a middle-class salary. Again, it depends on your needs and retirement timeline.

Cut Major Expenses

ChatGPT also suggested cutting down on these key areas:

• Housing costs
• Transportation
• Food costs (especially going out to eat)

Generally speaking, these are the biggest expenses in a person’s budget. But you may also want to consider your current — and future — expenses more carefully. Look at things like your debts, childcare costs (if relevant), healthcare needs and insurance.

Rely on FIRE Community Tools

There are plenty of community tools to help you stay on track with your early retirement goals. Some the AI tool recommended include:

• Reddit’s r/financialindependence
• Personal finance and financial literacy blogs
• FIRECalc (an early retirement calculator)
• Personal budgeting apps

Have an Exit Strategy

Lastly, ChatGPT’s advice was to have an exit strategy in place. As you get closer to your early retirement date, it said to:

• Consider the option of working part-time or freelance before fully retiring
• Plan for healthcare needs
• Rebalance your investments for long-term stability (but this may lead to lower returns or impact your annual retirement income)
• Consider moving to a cheaper city or country (may not be viable if you rely on your current community or the cost of moving is hefty)

Overall, the AI tool’s suggestions can get you on the path to early retirement. But you might still want to work with a professional to create a more custom plan.

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