How Will Ai Affect Financial Planning For Retirement?

I recently attended a financial advisor conference focused on artificial intelligence. Drawing on what I learned, this post summarizes my thoughts on how AI may reshape financial planning for retirement savers. Spoiler alert: I think it has great potential to help both advisors and individuals.

The first iteration of AI tools has already improved retirement planning. For example, forward-thinking advisors are currently using AI note-taking tools, which allow advisors to listen more closely to their clients without missing any key details. A good AI tool will summarize the meeting, complete with a list of follow-up items.

For DIY investors, chatbots like Claude or ChatGPT are useful tools for researching financial products, tax rules, and harder questions like when to claim Social Security. AI performs reasonably well on well-defined questions with clear frameworks, though it can still provide misinformation when concepts are too nuanced or when inputs are incomplete.  

But AI’s greatest potential for retirement planning involves combining and analyzing separate data sources to gain new insights, such as identifying opportunities and vulnerabilities.

AI and Advisors: Squeezing Insight Out of Data

Currently, most financial advisors and planners use a handful of software tools that don’t communicate with each other. For example, a typical practice might include a financial planning tool; a customer relationship management (CRM) system; a reporting and billing system; a tax planning tool; a trading platform; and an application for one or more custodians – all operating separately.

One promise of AI is that it can provide a data overlay that pulls all these sources together into one dashboard, allowing a trained planner to quickly gather information in one place.

Let’s say a client asks their advisor to draw $50,000 from their accounts to pay for a new car. The current process might be:

1. Review accounts individually to see how much has been withdrawn year to date.
2. Look at last year’s tax return to see typical income.
3. Review CRM notes to see whether there are other expected changes in income based on recent conversations.

If the advisor is lucky, they haven’t forgotten any other tidbits of information from earlier conversations with the client.

New AI tools should allow the advisor to access all these data sources with a single query, “Susan is 70 years old and retired. She wants to withdraw $50k with minimal tax impact. Review her accounts, tax return, and notes and tell me which accounts should be pulled from for the best tax efficiency.”

A good AI tool might look at her Social Security, pension, and investment income and see that she can receive another $10,000 in income and stay in the 12% tax bracket. It may therefore recommend pulling $10k from an IRA to max out this bracket, and pull the remainder from a taxable brokerage account. It might look through the notes to see whether Susan expects a major change in income.

The advisor still needs to understand the taxability of each account and the interplay of income from accounts, capital gains, and earned income. But AI can help get the job done more efficiently, with a lower likelihood of missing something important. It brings the advice to a deeper level.

This “data overlay” does not seem to be commonplace among advisors yet, but it appears to be just around the corner.

AI and the DIY Retirement Saver: Leveling the Playing Field

AI may have even more potential for retirement savers who manage their own finances. Access to high-quality financial guidance has historically been uneven. Those with substantial assets could hire professionals, while others have had to navigate complex decisions largely on their own. For those willing to learn, AI could level the playing field.

I told Claude AI to pretend I was a healthy, single, 62-year-old woman with some savings who wants to retire at 65 and is concerned about longevity and inflation. I then asked whether I should delay Social Security benefits until age 70.

Claude’s response was thoughtful and balanced, something similar to what I would tell a client. It suggested that delaying benefits might make sense. But it also offered this tradeoff: “Between ages 65 and 70, you’ll need to fund five years of retirement without Social Security. That means drawing down your savings more heavily in those early years. Whether that’s sustainable depends on how much you’ve saved. A financial planner can help you model whether your portfolio can bridge that gap comfortably.”

This insight is a huge leap forward from a Google search on the topic, and the answer would almost certainly improve if I provided more data.

With AI, DIY retirement savers will have more resources than ever to manage their financial lives, but it’s still going to require a lot of work. Rather than a threat to the advisory profession, AI-enhanced advice for DIYers looks like a continuation of a long trend toward greater financial access, and is a development worth watching closely from a retirement security perspective.

The Ability to Do More

Will AI replace human advisors? My experience in talking with hundreds of potential clients over the years is that some people will always hire an advisor, and some will always want to do it themselves. For either constituency, AI looks poised to offer a significant upgrade.

In the past decade, we’ve moved from paper ledgers to spreadsheets to sophisticated planning software, which has created massive efficiencies. AI appears to be the next chapter in that evolution. Early signs suggest it will expand what’s possible.

That’s a reason for optimism on behalf of retirement savers. Those who work with advisors may find those relationships becoming richer and more proactive. Those who prefer a DIY approach may find better tools than ever to help them navigate the road ahead. Either way, I’m hopeful that AI can help people arrive at retirement with more financial security and confidence.

Disclosure: The author uses AI tools, including Claude, to assist with editing and reviewing written content.

Luke Delorme, CFP® is Director of Financial Planning at Tableaux Wealth in Great Barrington, MA (www.tableauxwealth.com), reachable at luke@tableauxwealth.com. To stay current on the Squared Away blog, join our free email list.

This blog post is for informational and educational purposes only and should not be considered financial advice. Consult a qualified professional for advice specific to your situation.