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Can An AI Help Me Plan My Retirement? Thumbnail

Can An AI Help Me Plan My Retirement?

Planning for Retirement

AI has become increasingly popular in recent years, and with the advent of ChatGPT, it seems like it 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 replace the need for a human financial professional who understands your unique goals.

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 understand the intricacies that make each person’s financial journey unique. It operates based on patterns and historical data, which might not always capture the full scope of an individual’s needs.

In addition, 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 planning into the hands of a tool that can provide completely inaccurate information is risky and not advised.

The Human Element in Financial Decision-Making

One of the primary reasons AI can’t replace 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 nuances of financial planning.

Furthermore, 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 anticipate unforeseen events that may alter the course of one’s financial journey.

The Importance of Human Professional

Financial professional are indispensable when it comes to financial planning. They can tackle complex topics like tax efficiency, asset allocation, portfolio rebalancing, and more.2

Financial professional may leverage the insights provided by AI tools, but they also incorporate qualitative information from clients and consider their unique circumstances and preferences. Human professional are skilled in interpreting the emotional aspects of financial decision-making, providing a level of guidance and understanding that AI simply can’t 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, and provided by Twenty Over Ten. 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.

Squire Investment Management Company, LLC (“Squire”) is an investment adviser registered with the United States Securities & Exchange Commission. Registration as an investment adviser does not indicate any level of skill or training. This document was created for informational purposes only and serves as general market commentary; it does not constitute investment advice, nor is it intended as an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors. All data or other information referenced herein is from sources believed to be reliable; however, Squire cannot guarantee the accuracy of information obtained from third parties. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.