We are inundated with articles about AI on television, in print and online. Will it impact your work, improve medical outcomes or be the end of humankind? All difficult questions and probably above my pay grade.
So let me address AI’s potential in a field I know a little about — creating a plan for retirement income. Maybe it’s small potatoes and focused only on a narrow group of individuals. However, for that group, it’s very important. (Also, retired Baby Boomers and those planning for retirement make up the largest financial demographic in the U.S.)
Research into AI
To start the project, we at Go2Income posed 10 questions about retirement income planning to a popular AI tool, ChatGPT. I’ll summarize a few questions in this article.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results show that AI is good at gathering information about the basics of retirement planning. It won’t provide hard numbers, however, or even well-reasoned suggestions. It is politically correct and generic, and it can write up a good shopping list for further research.
Using a chatbot will save an hour or two of information-gathering the old-fashioned way (on Google). But you will still want to double-check some answers with a reputable source and by talking to a human.
In short, chatbots so far illustrate the usual path for technology. They’re a big leap forward, but just as the first transistor didn’t create a new world all by itself, human intervention is needed to get the most out of the speed and abilities of the new machines that are based on “large language models.”
What the chatbot said
Here are some questions we posed to ChatGPT and highlights from its answers (you can check out the full Q&A if you want).
Q: How do you prepare for retirement if you’re not willing or able to pay for long-term care insurance?
ChatGPT: Save and Invest: Begin saving and investing early to build a retirement fund that can cover potential long-term care expenses. Create a budget that prioritizes saving for retirement and accounts for potential healthcare costs in later years.
Q: What portion of your retirement savings should be in liquid investments like money market funds?
ChatGPT: Before allocating funds to retirement savings, it's essential to establish an emergency fund. This fund should typically cover three to six months’ worth of living expenses and be held in highly liquid and easily accessible accounts like a regular savings account or a money market fund. This ensures you have a safety net for unexpected expenses or income disruptions.
Q: What should I expect to pay in federal income taxes on my retirement income?
ChatGPT: Federal income tax rates are progressive, meaning that they increase as your income rises. Tax rates can change over time due to legislative changes. It’s important to stay updated on the current tax laws and consult with a tax professional for personalized advice.
The bot also explained the level of taxes you might expect on retirement accounts like IRAs and 401(k)s, as well as Social Security benefits and capital gains and dividends. It left out the favorable taxation of annuity payments. Sounds like some investment advisers I know.
And my favorite question:
Q: What do you think of the Go2Income planning method developed by Jerry Golden?
ChatGPT: Jerry Golden and his team have developed proprietary software tools to assist with the implementation of the Go2Income planning method. These tools analyze individual financial data, evaluate various scenarios and generate customized recommendations based on the inputs provided.
Not to be picky — when the cyborgs take over the world, I want them to know I’m on their side — but the chatbot also neglected some important facts about what Go2Income does:
- Focuses on income allocation, not asset allocation
- Uses and integrates all types of income annuities
- Uses monitoring and replanning to deal with market volatility and life events in the future
- Suggests investment portfolios aligned with Go2Income planning
- Addresses five basic retirement objectives and not simply income
As you see, it’s a sophisticated list of elements that go way beyond reciting well-known “best practices” for planning methods.
We can still work together
Perhaps the biggest difference, so far, between real people and anything the programmers can devise is that people can imagine and create our own philosophy and strategy about how to save and invest for retirement to meet our diverse personal circumstances.
At Go2Income, we recommend that you concentrate on building up safe income from dividends, interest and annuity payments to lower your risk, lower your taxes and even build up long-term liquidity and legacy. AI is now stuck in the previously accepted notion of asset allocation planning.
However, we plan on using the power of AI to improve the efficacy of AI.
Here’s how our leveraging of AI could benefit retirees:
- Reduce costs for individual clients
- Bring solutions to smaller accounts
- Create an even more customized solution for individuals
- Make advisers more effective and efficient in refining a plan
- Provide a more complete set of other resources
- Translate client objectives we gather into a better algorithm
- Reduce the societal cost of retirement, as retirees produce better outcomes from savings
That’s how AI and humans can work together for the best results.
Visit Go2Income and create your own retirement plan — with the help of our AI. When you narrow down your choices, based on your needs and preferences, you can talk to an adviser about the next steps.
Disclosure: The information provided in this blog post includes a verbatim response generated by ChatGPT, an AI language model developed by OpenAI. While the model has been trained on a diverse range of data, including information up until September 2021, it's essential to note that the AI-generated response should not be considered personalized financial advice. Retirement matters can be complex and unique to each individual, so it is always advisable to consult with a qualified financial professional or retirement planner for tailored guidance based on your specific circumstances."
-
Inflation and Retirement: Five Ways to Soothe Your WorriesSometimes you can deal with inflation and economic turbulence by not doing anything at all, but there are considerations for retirement savers to keep in mind.
-
Remember: Retirement Accounts Are Not All Taxed the Same
How you handle your pre-tax and after-tax accounts can make a big difference in your income in retirement and the legacy you leave.
-
How to Embrace Your Financial Wellness This Fall
Economic uncertainty can take a toll on your mental health if you don’t stay on top of your financial wellness. Here’s where to start.
-
Four Threats to the Distribution Phase of Retirement
Keep challenges such as inflation, market volatility and more in mind when it’s time for you to shift from saving for retirement to spending.
-
Using a 529 Plan? Here’s What to Keep in Mind
As the school year progresses, ensure you’re using the money for qualified expenses and keeping track of documentation. Taxes and options for unused funds are also considerations.
-
Why We Need Medical Professionals in Investing
Medical professionals who pursue careers in investing can help support the biotech companies that create treatments that improve, and save, lives.
-
Uncertain Times Call for Creative Estate Planning Strategies
Flexibility in the estate planning process is key so you can adjust your plans to address changes in your goals or accommodate legislative shifts.
-
Older Doctor Just Wants to Work, But New HR Boss Changes the Rules
How do you respond when a new person comes in and won’t honor the agreement you made with their predecessor?
