ChatGPT vs. Financial Adviser: We Asked Both One Question — How Much Should I Have Saved for Retirement? Here’s How Each Stacked Up
As the world becomes more dependent on technology, it’s no surprise that artificial intelligence (AI) is rapidly advancing and creating an impact across various sectors. One example is the emergence of ChatGPT, an AI chatbot that creates content and provides advice on a range of topics, including finance. So, we decided to put ChatGPT to the test and ask it a common financial question – how much should I have saved for retirement? We then compared its answer to a human financial advisor’s response. Here’s what we found:
ChatGPT-4 answered the question by considering various factors, such as retirement goals, retirement age, Social Security benefits, and current savings. It provided guidelines and rules of thumb, such as aiming to replace at least 70% to 80% of pre-retirement income and saving between 10% and 15% of annual income. While ChatGPT’s response is informative, it lacks context and fails to account for individual circumstances and objectives.
Financial adviser’s response
Nicholas Bunio, a certified financial planner, points out that ChatGPT’s response is not entirely helpful because it does not consider various key factors. For instance, retirement goals can vary from leaving an inheritance to starting a consulting business, and the ideal retirement age can depend on individual circumstances, such as health and marital status. Additionally, maximizing Social Security benefits can vary depending on life expectancy, where taking it sooner can be more prudent for those planning on living a shorter amount of time.
A recent Goldman Sachs study suggests that AI tools such as ChatGPT could impact as many as 300 million full-time jobs worldwide.
Approximately 39% of Americans do not have any retirement savings, according to a survey by GoBankingRates.
The average retirement savings for Americans aged 65 and over is $172,197, according to a report by the Transamerica Center for Retirement Studies.
While ChatGPT provides generalized advice, individual needs, circumstances, and financial goals determine how much retirement savings one should aim for. Seeking a human financial advisor’s guidance is still vital to ensure personalized retirement planning that considers all factors. It’s worth noting that technology can assist financial planners by providing more accurate and timely data analysis, but human judgment and experience are still necessary.
The emergence of technology like ChatGPT highlights the importance of exploring innovative tools to promote financial literacy and guidance. However, it’s crucial to recognize technology’s limitations and continue to rely on individual financial advisors’ expertise when developing personalized retirement plans. It’s clear that while AI has its benefits, it is not a one-size-fits-all solution, and financial planning ultimately requires the human element.