ChatGPT seemingly has an answer for everything, but you should be prepared that it might not always tell you what you want to hear — especially when it comes to determining when you can retire.
If you’re like the bulk of Americans who are behind the curve when it comes to saving for retirement, for example, ChatGPT might not give you the hopeful answer you’re looking for. But when I asked that question of ChatGPT myself, I couldn’t believe the answer — not because of what it told me, but because of what it asked me.
Below is what ChatGPT told me when I asked, “When can I retire?”
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ChatGPT Asks the Right Questions
I figured that ChatGPT would ask for some data before it could spit out a retirement age calculation, but the thoroughness of its process was actually impressive. Here is what ChatGPT asked me for upon the first prompt.
Current Info:
Your age
Annual income (before taxes)
Current retirement savings (401(k), IRA, etc.)
Monthly contribution to retirement savings
Do you expect an inheritance? (If so, how much and when?)
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Assets and Expenses:
Home equity (if you own a home)
Do you plan to sell your home at retirement?
Current monthly living expenses
Expected expenses in retirement (monthly)
Assumptions:
Planned retirement age (if you have one in mind)
Desired estate at death (if any)
Expected investment return (average annual %)
Expected inflation rate or cost-of-living increase (%)
Social Security:
Expected monthly Social Security benefit
At what age will you start claiming it?
These questions were much more detailed than the ones I’ve seen online with some basic retirement planning calculators. Factoring in variables like inflation or cost-of-living increases and post-retirement expenses help ChatGPT provide a much more real-world answer.
So, What’s the Answer?
Using reasonable real-world numbers, below is the quite thorough answer offered by ChatGPT.
“Let’s break down your retirement scenario based on your variables and determine whether retiring at age 67 is sustainable.
Key Inputs
Current Age: 50
Planned Retirement Age: 67
Current Income: $85,000
Current Retirement Savings: $200,000
Monthly Contributions: $1,000
Expected Home Equity at 67: $300,000 (sold and reinvested)
Inheritance: None
Monthly Living Expenses Now: $7,000
Monthly Retirement Expenses: $6,000 (inflating at 2%)
Desired Estate at Death: $100,000
Investment Return: 5% annually
Inflation Rate: 2% annually
Social Security: $2,200 a month at 67, growing 2% per year
Projections Through Age 67
We’ll project your retirement savings from age 50 to 67, with:
$1,000 a month contributions
5% annual return
Future Value of Retirement Savings:
Using compounding:
Monthly investment return = 5% ÷ 12 ≈ 0.4167%
17 years x 12 = 204 months
By Age 67:
Your $200,000 starting balance will grow
$1,000 a month contributions for 204 months
At 5% return: ≈ $628,000
Add $300,000 from home sale at 67 and the Total Retirement Assets: ≈ $928,000
Retirement Drawdown Projection (Age 67 and older)
Assumptions:
$6,000 a month expenses (inflating 2%)
$2,200 a month Social Security (starting at 67, rising 2% annually)
$928,000 invested at 5%
Drawdown continues until estate reaches $100,000 at death
Let’s look at your portfolio over time:
Age | Start Balance | Investment Growth | Net Withdrawals | End Balance |
67 | $928,000 | $46,400 | $45,600 | $928,800 |
70 | $939,000 | $46,950 | $48,200 | $937,800 |
75 | $931,000 | $46,550 | $52,400 | $917,700 |
80 | $868,000 | $43,400 | $57,000 | $854,400 |
85 | $759,000 | $37,950 | $62,000 | $735,000 |
90 | $579,000 | $28,950 | $67,000 | $541,000 |
95 | $278,000 | $13,900 | $73,000 | $219,000 |
97 | $159,000 | $7,950 | $75,000 | $91,950 |
Result: You would run out of money just after age 97, ending with approximately $92,000 — very close to your $100,000 estate goal.
Conclusion
You can comfortably retire at age 67 with:
$928,000 in retirement assets
$2,200 a month Social Security (rising 2%)
$6,000 a month retirement spending (rising 2%)
Investment returns of 5%
A final estate value near $100,000
Would you like to:
See a graph of the year-by-year projection?
Run a scenario for early retirement (e.g., age 65)?
Compare what happens with $5,500 a month or $6,500 a month expenses?
Let me know how you’d like to fine-tune it.”
But Even AI Isn’t Perfect
As impressive as ChatGPT’s answers are, it’s important to note that there was no critical thinking involved. The phrase “garbage in, garbage out” definitely applies to ChatGPT, as its answers can only be as accurate as the information you feed it. This is why it still pays to work with a professional advisor when it comes to something as important as your retirement planning.
If you rely on yourself to ask ChatGPT for input, it’s highly likely you overlook some crucial questions that could have a big impact on your ability to retire at a certain age. A financial advisor, on the other hand, has the expertise and training to look deeper into your financial situation and ask you about variables that directly affect you personally.
The bottom line is that while ChatGPT can point you in the right direction and offer you a potential road map for retirement, working in conjunction with a financial advisor can help you avoid the hidden potholes along the way.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT When I Could Retire — I Couldn’t Believe the Answer
