Under typical circumstances, it is recommended that you consult with a financial advisor when it comes to planning your retirement. There are lots of considerations, such as how much your Social Security monthly payment will be and what your 401(k) and IRA accounts will have in them by the time you decide to clock out of the workforce.
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These days, though, more people are taking an alternative route to tracking what you’ll need in terms of money to retire: artificial intelligence. AARP found that you can use AI as a financial planner to an extent, though it should not have the final say. With all that in mind, be advised that you should still work with a professional person on planning your retirement, but just as an experiment, GOBankingRates asked ChatGPT how much money it would take to retire in 15 years.
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Quick Take: How Much Money Do You Need To Retire?
It seems like more and more people are taking a route a little outside of the beaten path when it comes to tracking what you’ll need, when you’ll need it by and just how much you’ll need in your retirement fund. Everyone wants a guarantee of future financial security in the long term, but what does that look like? Here are a few key takeaways:
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The average monthly Social Security benefit for retired workers is currently about $2,002.
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A good rule when it comes to retirement calculus is to have enough to draw down 80% to 90% of your pre-retirement income.
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Another formula that is recommended by financial experts is to save 12 times your pre-retirement salary to help subsidize your income in retirement.
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Know What Information You Need To Get the Best Answers
The general question — “How much money will I need to retire in 15 years?” — prompted ChatGPT to request specific key information, including current age, desired retirement age and expected annual expenses in today’s dollars for retirement.
It also requested some calculations, such as life expectancy minus retirement age to determine the years in retirement, and the expected inflation rate. Additionally, ChatGPT needed the expected investment return before and during retirement, plus other sources of earnings during retirement, like Social Security or pension payments.
Lastly, it looked at current retirement savings and annual contributions made up to the age of retirement.
Estimated Calculations Are Only Guidelines
With no other prompting, ChatGPT drew an example of a 50-year-old who is looking to retire by age 65 with $60,000 in yearly retirement expenses based on 2025 dollars.
If that person lived another 25 years to the age of 90, ChatGPT predicted there would be an average inflation rate of 2.5% per year. The expected investment return before retirement was 6% and 4% during retirement.
With a Social Security benefit payment of $25,000 annually starting at age 67 and annual contributions made to a retirement account, the total amount ChatGPT approximated that person would need at $300,000 in current savings.
Finalizing the Math
To determine the rough estimate, ChatGPT suggested that someone needed about 25 times their expected annual spending in retirement, based on the 4% rule. Therefore, it stated that if a retiree needed $60,000 per year in today’s dollars, and adjusted for 2.5% inflation over 15 years, they would need a nest egg of around $2.15 million in retirement.
From there, ChatGPT suggested a retiree would deduct Social Security — which it said would amount to around $625,000 if using the 4% rule to offset some cost-of-living expenses, as well as “existing savings growth and future contributions.”
It also indicated that while $2.15 million is the estimated amount of money you’d need to retire in 15 years, there are other factors at play, such as growth from current investments, which would vary from person to person based on their individual portfolio.
Final Take To GO: Can You Trust It?
The bottom line is that ChatGPT is notoriously bad at math, so you would definitely want to double-check any numbers it offered you. It’s also important to note that it may not always have up-to-date information or take into account the nuances of a changing economy or unexpected expenses, like healthcare.
While ChatGPT’s advice isn’t a bad start, it’s important to also do your own research — and talking to that human financial advisor isn’t a bad idea.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT How Much Money I’ll Need To Retire in 15 Years
