Not everyone can afford a financial advisor, which can make it difficult to get precise information about how much you need to retire. While ChatGpt can make mistakes, getting basic information is usually a good early resource, and you can use simple searches for fact checking online.
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I decided to ask AI how much it will cost to retire in 10 years, and that's what it says.
I started with a general query and saw what kind of advice it would provide without knowing my financial situation, age and distance to retirement. chatgpt gives me a basic overview:
Estimate your annual retirement expenses. After adding up everything from home and food to entertainment and leisure and inflation adjustments, Chatgpt says the annual amount is your "target benchmark." Assume that's $60,000 a year. (Sure, this is a low-year figure for many.)
Multiply by your retirement year. Chatgpt recommends retirement for 25 to 30 years of safety estimates. So you'll spend $60,000 and multiply it by 25 years = $1.5 million.
Less other sources of income. If you have other incomes like pensions, rental income, annuities and expectant social security, Chatgpt says to subtract those income from the income you need to save. For example: If Social Security will pay $20,000 per year, that is $500,000 for life benefits (25 years). Your new savings target: $1.5 million - $500,000 = $1 million
Factors of inflation and health costs. Chatgpt recommends factoring inflation at a rate of 2% to 3% per year, although inflation has recently developed, you may need more than that. It then recommends you increase your target savings by 20% to 30% to get health care and unexpected costs. This will give you an adjustment target of $1.2 million to $1.3 million.
Check your current savings and investment growth. Using the composite interest calculator, Chatgpt recommends that you find out the growth trajectory of current savings. For example, if you save $5,000/month with 7% annual earnings, it's ~$870,000 over 10 years. If you have saved $400,000, total = approximately $1.27 million
Learn more: You need to save money every month to retire in comfort in every state
Chatgpt's bottom line is that the "universal me" retires within 10 years is:
Target savings: $1 million to $1.5 million, depending on lifestyle and location
Need monthly savings: $4,000-$6,000 If starting from scratch
Growth Strategy: Invest in a diversified portfolio (not just savings).
While it is a good benchmark, this general advice doesn't say what my specific financial situation is. While I don't want to share too much personal details here, I would say I'm 51 this year, so 10 years from now, at 61, will be a very early retirement for me. Although my husband and I have a two-income family, some retirement savings, and can pay off our mortgages in the next decade, we live in California, one of the most cost-effective states in the entire United States, and we also have a teenager about to go to college and need to figure out how to raise funds for it. I also have elderly parents to consider.
So I gave Chatgpt more personal details about me including:
Current age
Current retirement savings
Combined with my husband's annual income
Expected retirement expenses
Social Security Plan
Mortgage period
Details about funding our son’s university
Chatgpt recommends that I use the 4% rule (you only withdraw 4% of your retirement savings per year) and add it to my expected social security (assuming that the fund will remain solvency when I get it from it). To do this, for my recognized low-key goal, what we actually need is to live in California, about $80,000 a year, and our retirement savings are at least twice as high as we are now. So that's sober. But remember, this is for early retirement! So it's possible that we'll get on track at the retirement age I really hoped for at the age of 70.
Chatgpt can help me move towards my early retirement goal by giving me an action plan to end. These include:
Maximum go out retire contribute: These include 401(k) plans, IRA and/or Roth IRAS.
use catch-up contribute: Because I'm over 50, I'm eligible for a one-time "catching up" contribution to my tax-promoted retirement account, which may benefit me from compound interest and significant growth.
invest Grow: It advises me to stick to a diversified portfolio “having some stocks” to get long-term gains.
plan healthy Coverage: It tells me to continue budgeting for private insurance until I qualify for medical insurance at 65.
Model A. slide Small road:Chatgpt suggests that I turn to “more conservative assets” because I am nearly retired, such as high-quality bonds, exchange-traded funds (ETFs), or fiscal inflation-protected securities (TIPS).
track expenditure close: It makes the obvious suggestion that we carefully track spending, especially after mortgage returns, to “keep lifestyle crawl.”
Build a bridge fund:chatgpt then urged me to consider "non-retirement investment accounts", such as money market accounts borrowed from between 60 and 67.
Chatgpt believes that if I align with savings and investments, I think I'm going to retire within 10 years. It certainly gave me food to think about - while I wasn't thinking about early retirement, maybe reality is more likely than I thought.
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