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If you’re looking for help with retirement budgeting and want to try going it alone, ChatGPT might be a good place to start. In fact, here’s what ChatGPT has to say about this kind of retirement plan: “A retirement of $50,000 a year may be comfortable and stable for many people — but what it looks like depends largely on where you live, housing costs, health care, and lifestyle choices.”
However, artificial intelligence (AI) chatbots may fail in their retirement planning. Here’s what ChatGPT recommends for a $50,000-a-year retirement, plus what some financial planners and experts had to say about its planning.
Chatgpt’s suggested budget
When planning a $50,000-a-year retirement, ChatGPT provided this sample monthly budget:
- Accommodation: $800 to $1,400
- Utilities and Internet: $250 to $350
- Eat: $500 to $700
- transportation: $300 to $500
- Health care: $400 to $700 (note that this will include Medicare premiums, supplemental plans, and out-of-pocket expenses)
- Insurance & Miscellaneous: $150 to $250
- Fun, Travel and Gifts: $300 to $600.
Financial planners’ reactions
So what do financial planners think about ChatGPT’s plan? Here are some of the things he said.
personalization
Marguerita Cheng, CFP, CEO Blue Ocean Global Wealthsaid that a client used a simple financial planning tool, and she noticed that the tool did not take into account that even though her mortgage would eventually be paid off, property taxes and homeowner’s insurance would continue.
“Basic financial planning applications and ChatGPT cannot provide opportunities for interactive financial planning and scenario planning,” Cheng said. “They may not allow as much personalization for risk tolerance.”
Brandon Gregg, CFP, Consultant BBK Wealth ManagementIt also noted that individual circumstances are an important consideration. “It depends entirely on a person’s financial situation. Unfortunately, many people live with considerable amounts of debt. In my experience the biggest struggle with planning is cash flow,” he said.
Flexible and emergency expenses
Taylor Kovar, CFP, CEO 11 financialnoted that the ChatGPT plan begins to appear untenable when it is assumed that everything remains the same from year to year. He said taxes are not consistent, and Social Security may be lightly taxed one year and more heavily taxed the next, depending on how withdrawals are handled.
ChatGPT’s plan also does not account for unexpected expenses. Annie Cole, Ed.D., Money Coach and Founder Money Essentials for WomenChatGPT gave this warning about the proposed budget: “This plan only works if the retiree can follow the budget without any emergency pop-up spending, which is unrealistic. A small buffer of at least 1%-2% should be added to the overall budget.”