I Asked ChatGPT If I Can Retire on $500K: Here’s What It Said
Written by
Nicholas Morine
Edited by
Levi Leidy
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While $500,000 may seem like a lot of money to have in the bank or in various forms of investments, when aiming at retirement, today’s economy is proving difficult for many retirees of all degrees of wealth.
With ChatGPT being able to scour various reputable sources on the subject of retirement, the question of whether it’s possible to retire with half a million dollars in assets was posed to the large language model.
The answer: Yes, but with a few notable nudges to keep things on track, and a few caveats in place.
Here’s what ChatGPT had to say on the subject.
An Annual Withdrawal Rate of 3.7% Results in $18,500: Is This Enough, Alongside Social Security?
Pulling numbers from Morningstar, ChatGPT suggested that an annual withdrawal rate (based on 2024’s figures) of 3.7% was considered “safe.”
In pure math terms, this equates to about $18,500 in withdrawals from your retirement funds on a yearly basis — which doesn’t sound like a whole lot. However, the artificial intelligence (AI) model also noted that most retirees would be able to benefit from Social Security payouts while leveraging their retirement nest egg, suggesting that they should “layer Social Security on top to see if essentials are covered.”
Build a Bare-Bones Retirement Budget Ahead of Time
The next step? Make sure that you’re creating a rock-solid budget before settling in for your golden years.
ChatGPT was clear to emphasize the importance of non-negotiable expenses as the crux of this budget, with all other nonessential spending being relegated to the bottom of the balance sheet as “nice-to-haves.”
“List non-negotiables (housing, food, utilities, insurance, basic transport). If the 3.7% draw plus Social Security covers this with a small cushion, $500K can work; if not, consider part-time income, delayed retirement or downsizing,” ChatGPT advised.
Don’t Forget About Healthcare Costs, Which Can Come Out of Nowhere
ChatGPT also cautioned would-be retirees about the significant costs of healthcare, which often emerge without warning and can be substantial.
“A typical 65-year-old may need about $172,500 over retirement for medical costs not fully covered by Medicare (premiums, co-pays, drugs, dental/vision). Budget it explicitly and consider health savings accounts (HSAs) if eligible,” the AI model urged.
Be Aware of Required Minimum Distributions (RMDs)
One thing that often escapes retirement plans: required minimum distributions (RMDs) for those holding traditional IRAs. Citing an IRS factsheet, ChatGPT underscored the importance of making sure that you’re prepared and planning to take your RMDs — likely beginning at the age of 73.
“Know when required minimum distributions begin (generally age 73). If most savings are in pre-tax accounts, explore small Roth conversions in low-income years before RMDs to manage future tax brackets,” ChatGPT wrote.
Spend Cash When Markets Are Down, and Cut Costs To Maintain Investment Portfolio Value
Finally, ChatGPT noted that market volatility could severely damage your overall asset portrait, particularly if you cash out during a downswing rather than spending cash holdings first — and curtailing discretionary spending to avoid digging into your market holdings.
“Early retirement market slumps can hurt a $500K nest egg. Tactics: spend from cash in bad years, trim discretionary outlays and delay big purchases until portfolios recover,” the AI noted.
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