Retirement planning involves dozens of moving parts, from investments to taxes to healthcare and more. Keeping track of all of these components can feel overwhelming, no matter how prepared you are.

AI has become a useful tool in many aspects of life, including retirement planning. It can’t replace a financial planner, but it can be an excellent starting point and a useful planning assistant. However, there are real risks and limitations you should be aware of.

Can AI Help with Retirement Planning?

Yes, AI can help you with certain aspects of retirement planning, but with some important caveats.

Think of AI as your personal assistant when it comes to retirement planning rather than your financial advisor or planner. It can help with time-consuming tasks like organizing information, building checklists and spreadsheets, explaining difficult concepts, comparing multiple scenarios, and even preparing questions for you to discuss with your advisor at your next meeting.

That being said, AI shouldn’t be a replacement for a fiduciary, tax advisor, investment manager, or any other financial professional. Don’t look at AI as a source of guaranteed answers. It can provide incomplete, outdated, or flat-out incorrect information. You should verify everything through a legitimate source, such as a government website or a financial professional.

For a broader look at how AI fits into personal finance, visit MIT Sloan’s guidance on using AI for retirement planning, which offers a useful framework for prompting AI tools in a way that brings to light its missteps and short-sightedness.

What AI Can Do Well When Planning for Retirement

Help clarify your retirement goals

The first step of retirement planning is knowing your specific goals, including your desired retirement age, lifestyle expectations, housing plans, charitable giving, and more. AI can help turn your vague goals into concrete categories in your retirement plan.

Organize your financial information before meeting with an advisor

Before you meet with your financial advisor, AI can help you create a document checklist that covers account types, income sources, insurance policies, debts, estate documents, tax documents, and employer benefits. Just make sure not to share any of this sensitive information or documents directly with AI.

Build a retirement planning checklist

AI can be an effective starting point for your retirement planning. It can help you create a checklist by age or stage of what to address in the decades leading up to (and after) retirement. 

Just make sure to bring the checklist to your financial advisor to make sure it’s complete, or compare it to our checklist of steps to help you prepare for retirement.

Explain retirement concepts in plain language

One of the most challenging aspects of preparing for retirement is all of the jargon and terminology that comes with it. AI can explain confusing terms like traditional versus Roth IRAs, how RMDs work, how to claim Social Security, and much more.

It’s true that your financial advisor can also explain these terms, but using AI ahead of time can help you walk into your advisor meeting with more confidence and can help make your meeting more efficient. However, AI explanations can sometimes be outdated or oversimplified, so treat them as a starting point.

How AI Can Help with Retirement Income Planning

Estimate spending categories

AI can help you build a basic framework for your retirement spending. You can feed it spending categories, and it can suggest some you may have missed, including housing, food, transportation, healthcare, travel, taxes, insurance, family support, and long-term planning. Getting a rough idea of your expected costs is helpful, even if the numbers aren’t spot on. 

Compare retirement income sources

AI can help you brainstorm possible income sources during retirement, including some that may or may not already be a part of your financial plan, such as Social Security, pension, 401(k), IRA, brokerage accounts, annuities, and part-time work or rental income.

Keep in mind that AI can’t help you with actual withdrawal sequencing, tax planning, and account selection. For that, you’ll need personalized advice from an advisor.

Prepare better questions about withdrawals and taxes

The better questions you go into your advisor meeting with, the more you can get out of it. AI can help you generate the right questions, including:

• Which retirement accounts should I draw from first?
• How could a Roth conversion affect my retirement plan?
• How will my RMDs affect my tax bracket in retirement?
• How should I coordinate Social Security benefits with portfolio withdrawals?
• How could Medicare surcharges and premiums affect my healthcare costs?

How AI Can Help with Social Security Decisions

Learn the basics of claiming age

Monthly Social Security retirement benefits vary depending on the age at which you retire. The amount you can get per month at 62 is lower, while waiting until age 70 will earn you the highest monthly benefit. AI can help you understand the basic rules around when you can start collecting benefits and how your age affects your benefits. 

Use AI to compare questions, not to make the final claiming decision

AI can help you think through the pros and cons, including considerations you haven’t considered, of claiming early, at full retirement age, or at age 70.

The Social Security Administration’s website breaks down estimates based on your earnings record, and AI can help you understand your options.

Keep in mind that claiming decisions depend on many factors, including your health, income needs, spouse’s benefits, taxes, work plans, and longevity expectations. AI can’t understand the ins and outs of all of these factors, so you shouldn’t rely on it to make the final decision.

How AI Can Help You Plan for Healthcare Costs in Retirement

Create a Medicare research checklist

AI can explain the basics of Medicare, including Part A (hospital coverage), Part B (medical coverage), Part D (prescription drug coverage), Medicare Advantage, and Medigap. It can provide a basic overview that can help you understand the Medicare landscape before your enrollment window opens.

Plan availability, costs, and coverage vary significantly by location, and they change annually, so make sure to fact-check these AI explanations rather than accepting them as truth right away.

Verify healthcare costs with official sources

You can find publicly available information about Medicare premiums, deductibles, coinsurance, and Part D income-related adjustment amounts. Check the U.S. Centers for Medicare & Medicaid Services (CMS) website for the latest figures.

How AI Can Help with Investment Education, But Not Investment Advice

Explain investment concepts

AI can help you explain the various investment concepts you’ll need to plan your retirement portfolio, including diversification, asset allocation, rebalancing, risk tolerance, and more. This background knowledge makes it easier to have informed conversations with your advisor.

Avoid treating AI as an investment manager

AI can help you understand concepts and handle some of the organizational steps of retirement planning, but it can’t serve as your investment manager. First, AI still often produces incorrect information. It also doesn’t understand your full financial situation, meaning its advice may be shortsighted. Finally, because AI isn’t a fiduciary, as many financial advisors are, it has no obligation to provide advice that’s actually in your best interests.

The Society of Actuaries report on AI in investment and retirement covers both the useful applications of AI in retirement planning, as well as the risks. This report can help you understand why you shouldn’t treat AI with the same deference you would a real financial professional.

The Risks of Using AI for Retirement Planning

While we’ve already touched on some of the problems with using AI for retirement planning, it’s important to understand how these risks can truly affect you.

AI can be wrong, outdated, or incomplete

AI tools sometimes return incorrect information, known as hallucinations. Yet, it provides them so confidently and makes them sound plausible enough that it’s easy to believe the information is true. Make sure to verify any information AI provides, either by checking original sources or asking your financial advisor. You should also double-check tax rules, contribution limits, costs, and deadlines, as these can change from year to year.

AI can’t give personalized advice

AI may have access to all the information available online, but it doesn’t know you and your unique situation, and it can’t give the nuanced, personalized advice you need. At best, AI may provide solid advice that gets you most of the way to your goals. At worst, AI could provide truly bad advice that does irreparable damage to your personal finances.

AI may not protect your privacy

If you enter sensitive information into AI, there’s no guarantee that information will stay private. Don’t share anything personal, including Social Security numbers, account numbers or credentials, tax returns or financial statements, estate documents, and private family or health information.

Use AI to create checklists and frameworks, but not to process your actual documents or information.

For more advice on keeping your information safe, the Department of Labor offers cybersecurity guidance on retirement plans for plan participants.

AI can be used in investment scams

Unfortunately, scammers are increasingly using AI language, fake platforms, deepfakes, chatbots, and “AI-powered” investment claims to target vulnerable people. Be skeptical of anything promising guaranteed returns, or any person or business who uses pressure tactics, unregistered platforms, or requests to move money quickly.

Read more about AI scams in this joint bulletin from the SEC, NASAA, and FINRA.

Safe Ways to Use AI When Planning for Retirement

Use AI for education and preparation

Some of the most valuable uses of AI in retirement are also the safest. There’s a significant knowledge gap when it comes to retirement planning in that many people don’t understand the concepts and strategies required to get them across the finish line. Similarly, people who do understand the concepts may simply not know where to start.

AI can be an excellent teacher and assistant, helping you understand the retirement jargon and build your basic organization and preparation. A few useful applications of AI include:

• Learning financial terms and concepts
• Organizing questions for your financial advisor
• Making checklists and spreadsheets
• Comparing various retirement options
• Summarizing publicly available information from official sources
• Preparing a document inventory (without uploading the documents themselves)

Ask AI to show assumptions and uncertainty

When you’re using AI for retirement topics, MIT Sloan recommends being straightforward and asking AI what assumptions it’s using to make its recommendations, the source of the information it’s sharing, and what information it’s leaving out.

Once you’ve asked AI to recognize any inaccuracies, it can go back and change its response. And by asking it to provide official sources for all information, you can verify it yourself to ensure it’s accurate. No matter how many uses you find for AI, it must always be fact-checked.

Three-step verification process

Use this simple three-step verification process any time you’re using AI for retirement planning:

1. Ask AI for a general explanation: This is an excellent first step but should never be your last step.
2. Verify facts with official sources: Sources may include the Social Security Administration, IRS, Securities and Exchange Commission, CMS, and more.
3. Review decisions with a financial advisor: A qualified financial professional can apply the facts that AI has provided to your unique situation.

AI Retirement Planning Prompt Examples

Goal-setting prompt

“I’m X years old and want to retire around age X. Help me define my retirement goals by asking me 10 questions about my desired lifestyle, location, healthcare, family support, travel, housing, and legacy. Turn my responses into concrete goals that I can bring to my financial advisor.” 

Advisor meeting prompt

“I’m meeting with my financial advisor to discuss retirement planning for the first time. Create a checklist of documents I should gather beforehand and the most important questions I should ask at my meeting. Do not ask for any account numbers, Social Security numbers, or other personal identifiers.”

Social Security prompt

“Compare the tradeoffs of claiming Social Security at 62, full retirement age, and 70. List the main pros and cons of each option and the type of person it’s best for. Then, include what information I should verify on SSA.gov when making my decision.”

Retirement income prompt

“Break down the most common retirement income sources and explain how the order you draw from them affects taxes. Then, give me 5-10 questions I should ask my financial advisor about building a tax-aware withdrawal sequence for my specific situation.”

Risk prompt

“I’m considering [retirement strategy]. Point out what assumptions I’m making that might be wrong, what risks I’m missing, and what a financial advisor might push back on. Tell me what I should verify with an official source before moving forward.”

When You Should Talk to a Financial Advisor Instead of Relying on AI

AI can be an invaluable tool, and some people might even find it meets their needs for this stage of life. However, there are some situations where it’s better to involve a financial advisor in your plans.

You are within 5 to 10 years of retirement

AI can help you prepare, but as you get closer to retirement, the stakes of each decision get higher. Personalized advice becomes increasingly valuable as retirement nears.

You need a retirement income plan

Converting your portfolio into a reliable source of income requires careful coordination, account sequencing, tax awareness, RMD timing, market risk management, longevity planning, and healthcare cost projections. These strategies are the core of retirement income planning, and they’re too complex to leave in the hands of AI.

You have tax, estate, business, or family complexity

If your situation involves any complexities, such as stock compensation, the sale of a business, multiple properties, a blended family, charitable giving, trusts, inherited accounts, or a large taxable investment portfolio, then AI likely can’t give solid personalized advice. And in these situations, the risk of bad advice can be costly.

You are unsure whether you are saving enough

If you’re building toward retirement but aren’t sure whether you’re on track, an advisor can help identify gaps in your savings plan and tell you exactly how much you should save each month to reach your goal.

Bottom Line: AI Is a Planning Assistant, not a Retirement Plan

AI can be a solid starting point when you’re working on your retirement plan. It can help you get organized, explain complex retirement concepts, and prepare you for meetings with your financial advisor. However, because of its shortcomings, AI can’t understand the nuances of your unique situation or give personalized advice. Furthermore, because of its security concerns, it can’t be trusted with your private data and sensitive information in the same way a trustworthy human advisor can.

If you want help turning your retirement questions into a personalized plan, a real financial advisor can help. Schedule a complimentary consultation with a Wealth Enhancement advisor to discuss your situation, get matched with an advisor, and take the first steps toward your comprehensive financial plan.

FAQs About AI Retirement Planning

Can AI create a retirement plan for me?

AI can help answer your basic retirement questions and create a general framework, but it can’t create your full retirement plan. Unlike a real financial advisor, AI isn’t capable of accounting for your unique tax picture, investment risk, estate goals, and family needs while also accounting for changing regulations.

Is AI retirement planning accurate?

AI can often return accurate information about basic retirement concepts, but it often provides incomplete, outdated, or outright wrong information. Not only does it often oversimplify very complex information, but it also doesn’t necessarily account for those regulations and figures that change annually.

What is the best AI tool for retirement planning?

There’s no single best AI tool for retirement planning. Each one offers pros and cons, and the right one depends on whether you need help with education, budgeting, document organization, investment research, or advisor preparation. The best way to learn is to experiment with several tools to decide which one works best for you.

Can AI tell me when to claim Social Security?

AI can explain the pros, cons, and tradeoffs of claiming Social Security at different ages, and may be able to break down which strategy is best for certain types of investors. However, it can’t give you an accurate, personalized recommendation based on your unique situation, nor should you plug your personal information into AI to get a more personalized response.

Is it safe to put financial information into AI?

No, it’s generally not safe to put sensitive financial information into AI. While it can help run hypothetical scenarios, you should not provide it with any of your account numbers, Social Security numbers, login credentials, tax returns, or other private data or documents.

Can AI replace a financial advisor?

No, AI can’t replace a financial advisor. While it can help with much of the preparation work, from explaining basic concepts to preparing you for your advisor meetings, it doesn’t replace fiduciary judgment and personalized advice. For important financial decisions, work with a qualified professional.

This information is not intended to provide individualized tax or legal advice. Discuss your specific situation with a qualified tax or legal professional.

There is no guarantee that asset allocation or diversification will enhance overall returns, outperform a non-diversified portfolio, nor ensure a profit or protect against a loss. Investing involves risk, including possible loss of principal.

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group.

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