AI is upending everything, including retirement planning.
The big picture: Our comfortable golden years have always rested on assumptions of a steady full-time career, employer-sponsored savings and a predictable job exit. Now those assumptions are fraying.
Zoom in: AI is already reshaping hiring and workforce strategies for big and small businesses alike.
- Gig and temporary work are flourishing in the uncertainty, but that means limited access to retirement savings options and reduced future Social Security benefits.
- Previously well-paid office workers funded their retirement accounts by performing tasks that chatbots can now do just as well or better.
What they're saying: AI will cause turbulence in retirement for some, but not for everyone, Vasant Dhar, author of the new book, "Thinking With Machines: The Brave New World of AI," tells Axios.
- Dhar says there's a split between people who passively rely on AI and those who actively use it to amplify their work. For the latter group, retirement prospects might even improve.
All the AI bubble anxiety isn't helping.
- Heavy exposure to AI stocks like Nvidia and the Mag 7 in 401(k)s is prompting warnings that a correction could hit retirement savings hard.
Reality check: AI can help with retirement planning too. But it's still prone to errors and bias.
- AI can democratize sophisticated planning and reduce the need for a high-paid planner. Investors at any stage of their career can use AI for scenario modeling, identify savings gaps, tax optimization, Roth conversions, and "what if" questions like, "What if I retire at 55 versus 65?"
- It can free them from busywork, allowing them to spend more time talking to clients about their retirement needs. However, experts warn that using it on your own can be risky.
- "Clients get really emotional about their money during volatile markets, and emotions often lead them to making bad decisions," Richard DellaRusso, wealth management managing director at UBS, told Axios. "We do a lot of handholding."
- AI is particularly unsuited for handling complex life events like divorce, inheritance or emotional questions about money. And be wary of turning over your personal and financial information to the bots, DellaRusso says.
Yes, but: AI has the ability to reduce emotional influences in decision-making, offering a more rational, data-based approach.
- For retirement planning, in particular, those who have the means might be better off combining AI with professional expertise.
- "Our clients like to talk to humans," DellaRusso says.
