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Can AI Help Me Plan My Retirement? Thumbnail

Can AI Help Me Plan My Retirement?

AI has become increasingly popular, and with the advent of ChatGPT and a multitude of other AI tools, it seems like AI can do almost anything! But can AI help you plan your retirement? The answer is that while AI can be a powerful tool for research, it doesn’t yet replace the need for a human financial professional. Let’s look at how AI can be a helpful tool in some ways and also examine its limitations.

Understanding the Limitations of AI

Retirement planning is a deeply personal endeavor, shaped by individual goals, risk tolerance, financial resources, and lifestyle aspirations. AI, despite its impressive capabilities, can’t yet understand the intricacies that make each person’s financial journey unique. It operates based on patterns and historical data, which, most likely does not capture the full scope of your individual needs.

Even the most cutting-edge AI tools still hallucinate or "create outputs that are nonsensical or altogether inaccurate.”1 As you can imagine, putting something as important as retirement or estate and legacy planning into the hands of a tool that can provide completely inaccurate information is risky at best.

The Human Element in Financial Decision-Making

One of the primary reasons AI has not replaced human involvement in retirement planning is the inherently emotional and subjective nature of financial decision-making. Personal goals, family dynamics, and lifestyle preferences are subjective variables that can significantly impact the retirement planning process. A machine, no matter how sophisticated, can’t understand the emotional and quite personal nuances of financial planning.

Retirement planning often involves considering life events and uncertainties that AI struggles to predict accurately. Personal health, family emergencies, or changes in market conditions are dynamic variables that require human intuition and adaptability. While AI can process historical data and identify trends, it can’t yet anticipate unforeseen events that may alter the course of one’s financial journey.

The Importance of Human Professionals

Financial professionals may leverage the insights provided by AI tools, but they also incorporate qualitative information from clients and consider your circumstances, values and preferences. Human professionals are skilled in interpreting the human aspects of financial decision-making, providing a level of guidance and understanding that AI simply has not yet been able to replicate.

  1. https://ibm.com/topics/ai-hallucinations
  2. https://www.forbes.com/advisor/retirement/financial-advisors-retirement-savings/

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.