Use of AI in Retirement Planning: Is It Good or Bad?

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Artificial intelligence (AI) is slowly becoming an integral part of our daily life. AI already helps us to personalize our social media feeds, web searches and online purchases, and in the future, it is expected to play a major role in financial planning as well, especially retirement planning. On the other hand, concerns have also been raised about the use of AI in retirement planning.

So, to help you decide on whether or not to use Artificial Intelligence for retirement planning, detailed below are the pros and cons of the use of AI in retirement planning.

Emerging AI Trends

Before we detail the pros and cons of the use of AI in retirement planning, let’s look at the emerging AI trends:

  • JPMorgan Chase recently developed its IndexGPT, its first AI financial advisory product. This product offers market-oriented financial advice to investors.
  • Morgan Stanley is working on launching an Open AI-powered chatbot to ensure its financial advisors have access to real-time research and data.
  • According to a study by, a fund consisting of 38 stocks chosen by ChatGPT has outperformed the top 10 most popular funds in the UK. The ChatGPT fund gained about 6.85% since it was founded about 16 weeks back, compared to an average return of -0.5% by popular UK funds.
  • Vanguard recently launched an AI-powered chatbot that allows customers to ask questions and request transactions.

Use Of AI In Retirement Planning: Why Is It Good?

AI can easily analyze vast amounts of data to make near-accurate predictions, and this has made AI an invaluable tool for investors and financial planners.

Another plus of AI is its ability to analyze an individual’s financial situation to develop personalized recommendations. On the other hand, traditional financial planning methods usually use generalized assumptions and provide one-size-fits-all recommendations, which may not always yield the best results.

Moreover, unlike traditional methods, AI can take into account an array of variables, such as income, financial goals, risk tolerance and expenses, to develop a customized financial plan that caters to retirees’ specific needs and preferences.

Additionally, AI can assist retirees in making smart and quick financial decisions by identifying trends and patterns even before they are apparent to the human eye.

AI algorithms constantly monitor real-time market fluctuations and compare them with historical data, to forecast market movements with a high degree of accuracy. This, in turn, could help retirees capitalize on potential opportunities, as well as minimize potential losses. All this eventually leads to a more robust and diversified portfolio.

The use of AI in retirement planning also allows retirees to adjust their investment strategies depending on the changing market conditions. AI-powered platforms constantly monitor the markets and automatically adjust the portfolio to ensure it aligns with the retirees’ long-term goals and risk tolerance.

On the other hand, traditional retirement planning methods periodically review the portfolio to make adjustments. This could result in missed opportunities or may even magnify losses.

Another benefit of AI is that it can easily explain the impact of different potential financial decisions on retirement goals. AI can easily simulate different scenarios, such as changes in different variables (income, expenses and more), to show their impact on the portfolio return. This could help retirees make more informed financial decisions.

The use of AI in retirement planning can also save time and money. Retirees can use AI to streamline the retirement planning process by automating many tasks. For instance, AI can eliminate manual data entry and in turn, reduce manual errors as well.

Risks Of Using AI In Retirement Planning

As with anything else, the use of AI in retirement planning has its own drawbacks as well.

The biggest risk is the lack of personal touch, which could lead to the potential lack of understanding for the end user, resulting in errors or misinterpretations. AI is a tool; its efficiency depends on the data you feed into it. 

Another risk is incorrect retirement plan information. There have been instances of AI-based tools giving out information that is confidently asserted but incorrect. Even a single incorrect piece of information could prove disastrous for your hard-earned savings. To mitigate such risk, retirees need to do thorough research on AI-based financial advisory services.

One more risk is the challenges in modeling retirement plans. This risk isn’t specific to AI, but rather to modeling retirement planning in general. Although the present models are powerful, they may fail to fully capture the intricacies of financial planning. AI tools developed on such models could result in flawed financial recommendations and decisions.

To mitigate such risk, it is important to use a hybrid AI approach that uses proven financial models along with proven AI algorithms. This would help in overcoming modeling limitations to give reliable retirement plans.

Final Words

Integrating AI into retirement planning has innumerable benefits, including making personalized recommendations, automating various tasks, identifying investment opportunities and more. All this could significantly improve financial outcomes for individuals by assisting them in making smarter financial decisions.

So, no doubt the use of AI in retirement planning could help boost the value of retirees’ portfolios. On the other hand, it is also true that it is no substitute for professional financial advice (at least as of now). So along with using AI, retirees need to still discuss their financial needs with a professional financial planner. Along with addressing their financial needs, a financial planner could also help retirees to make the most of AI-powered tools.