Retirement Savings: 4 Reasons AI and ChatGPT Might Hurt Your Future Prospects

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Artificial intelligence is already ingrained in our daily lives. Every time you use Google, ask Alexa what the temperature is, follow your GPS to find an address or order something online, you’re using AI.

Banks that handle your money are going all in on AI, too. They’re using it for the routine transactions you’re accustomed to, such as checking your balance and resetting your password. They’ve also gone to the next level by employing your data to analyze your bank usage and provide you with customized offers and customer service. More innovations are in the works.

So it begs the question: What can’t AI do in terms of your finances? Well, when it comes to planning for your retirement, it can’t do the most basic tasks — listen to your needs, goals, challenges and dreams. And, according to financial planners we spoke with, that’s where AI can’t replace the human touch.

Over-Relying on AI Is a Problem

Jon Mack, the managing director of cyber and technology managed service provider Swiftcomm, said the reliance on AI has its negatives for retirement planning.

“While AI, including platforms like ChatGPT, can offer numerous benefits, there are potential downsides, especially when applied to retirement planning,” he said. “One of the key areas of concern is over-reliance on AI. AI can streamline financial planning, but it can’t replace the human touch completely. AI doesn’t understand human emotions, individual circumstances or long-term life goals in the way a human financial advisor would. It may not be able to tailor advice to the unique needs of a retiree.”

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AI Can’t Provide Personalized Advice or Assistance

“AI can be helpful for finding general information, such as contribution limits for retirement accounts. It can also provide general rules of thumb for savings targets, but it cannot provide personalized advice,” said Kendall Meade, a certified financial planner at SoFi.

To Meade, the advice from AI concerning retirement planning is too generic. “It may use the 4% rule and tell you if you are spending $40,000 a year you can retire once you have $1 million saved up,” she said.

But that isn’t enough. Instead, you need a personalized blueprint that only can be created by working one-on-one with a planner, she said.

“This doesn’t take into account other sources of income you may have or unexpected expenses. While this can be a good target, you want to have a full financial plan run before you make any irreversible decisions such as leaving the workforce,” she said of the generic advice. “A comprehensive financial plan looks at your specific financials and goals to determine if you are on track. This will include factors such as inflation, healthcare costs, long-term care events, other sources of income you may have and more.”

Plus, Mack said, if you rely only on AI for retirement planning, you might not achieve the best results. “AI-driven investment platforms can be subject to programming biases or limitations, potentially leading to non-optimal decisions. These could have long-term repercussions for a retiree’s financial health,” he said.

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There Are AI Security Issues

Mack said concerns also exist about security and privacy with AI.

“AI systems operate on large data sets, and in the case of financial planning, this could include sensitive personal and financial data. If there are breaches, this could have a significant impact on someone’s financial stability and retirement plans,” he said.

Impact on Your Job

Workers at any age — especially those near retirement — also should fear the impact AI can have on their jobs. Are you in a career that could vanish one day, with your job being shifted away from humans and to AI?

Dr. Martin Mulyadi, a professor of accounting at Shenandoah University School of Business in Virginia, said it’s a concern.

“One of the most possible ways AI could impact retirement prospects is through job displacement,” he said. “Automation that AI brings will replace certain jobs, and when that is the case, this will impact workers, and some of them may be close — but not yet there — to retirement. If AI replaces their jobs, it is possible that they may struggle to find employment. This could, in turn, affect their ability to save for retirement. Of course, in this case, reskilling and upskilling are important to avoid such a case.”

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