Top 10 Reasons AI isn’t good for Retirement Planning

AI can be a helpful tool for learning about retirement planning, but it should not be treated as a complete replacement for a personalized retirement plan. While AI can quickly generate polished answers about Social Security, Roth conversions, taxes, income planning, and investment withdrawals, it may miss the human context, sequencing, trade-offs, and long-term consequences that matter most in retirement. In the transcript below, Troy Sharpe explains 10 important limitations of using AI for retirement planning and how retirees can use AI more safely as an educational tool.

Should You Use AI for Retirement Planning?

AI can be useful for learning about retirement planning, but it should not be used as the sole source for making retirement decisions. AI may help explain Social Security, Roth conversions, taxes, income planning, and investment concepts, but it can miss personal details, sequencing issues, tax consequences, survivor planning, Medicare impacts, and behavioral factors that affect whether a retirement plan actually works.

Key Takeaways

• AI can generate a retirement plan quickly, but a confident answer is not the same as a complete financial plan.
• Retirement planning often requires balancing competing priorities, including taxes, income, Social Security, Medicare premiums, Roth conversions, risk, and estate planning.
• AI may optimize for the wrong outcome, such as the highest ending balance or lowest tax bill, without understanding what matters most to you.
• AI only works with the information you provide, which means missing or incorrect inputs can lead to misleading recommendations.
• Many retirement decisions do not reveal their full impact for several years, especially tax and Medicare-related decisions.
• AI can be useful for education, preparing questions, understanding jargon, and becoming a more informed client.
• Major financial decisions should still be reviewed in the context of your full retirement plan, tax situation, family needs, and long-term goals.

Who This Is For

This article is especially relevant for people in their 50s, 60s, or early retirement years who are exploring how AI tools can help them understand retirement planning. It is also useful for anyone considering AI-generated guidance about Social Security, Roth conversions, taxes, Medicare premiums, investment withdrawals, or retirement income strategies.

Transcript

AI can write you a retirement plan in about 30 seconds. It will sound confident, it’ll be clean, and it’ll look nicer probably than anything you’ve ever received before. But here’s the uncomfortable question. Should you trust the next 30 years of your retirement based on something that you simply typed into a box? The challenge with retirement planning is that decisions you make today often don’t show themselves to be good or bad decisions for two, three, four, five years, maybe even seven, eight, nine, or ten years.

I’m not here to bash AI. I think it’s one of the most useful tools that’s ever been created. And if you’re 60 years old and approaching retirement and you want to use it as an educational tool, I think that’s extremely powerful. And I think that’s something that you absolutely should do. There’s a big difference though between using AI as an educational tool and using one to actually build a plan that impacts not only your life, but your spouse’s life and your family. Today we’re going to go through 10 things that you should know when it comes to using AI for retirement planning.

But before we begin, it’s important to know that we do this for a living. So everything that I tell you, of course, should be weighed against that. But after 20 years of doing this, I’ve learned that retirement planning oftentimes is more art than science. The math matters, but so do human behavior, fear, timing, health, taxes, sequence of decisions. All of these things come together.

To determine the success of a retirement plan. So this video is not AI bad, advisor good. It’s simply a list of the 10 things that AI may miss and why those things in particular are the ones that could hurt you the most.

#10: AI Optimizes the Wrong Thing

Number 10, AI can optimize the wrong thing. So ask it to plan your retirement and it’s going to look for something it can measure: the highest ending balance, the highest safe withdrawal rate, the lowest amount of taxes. AI optimizes a number because a number is what it can see.

But retirement isn’t a simple math contest. Sometimes it makes sense to pay a little bit more tax now so you can pay less tax later. Sometimes you have to make decisions that maybe don’t mathematically make sense today, but in the grand scheme of your retirement, they create more flexibility or more simplicity, or they create a greater likelihood that you could stay committed to a plan.

Making the right decision in retirement is often about understanding the trade-offs and accepting that trade-offs come with costs. So if you have to make a decision today, it may cost you a little bit something. Maybe it’s less flexibility, maybe it’s more taxes, maybe it’s less income. You have to understand those costs. Be the reason you accept those costs, though, is because ultimately you’re making a decision based on what matters most to you over the long haul. AI doesn’t necessarily know what matters most to you in retirement. It just simply optimizes the number. Making the right decision in retirement

Involves weighing the trade-offs of those decisions and the costs that they come with. Now, not every cost needs to be optimized away. And the reason is some of those costs you accept on purpose because they serve what matters most to you. AI doesn’t understand what matters most to you, it simply looks to optimize the number based on the question that you asked.

#9: The Collision of Competing Priorities

Number nine, AI cannot see the sequence of decisions that needs to be made or have the memory to understand what’s happened in the past.

There’s a concept in retirement planning that’s called competing priorities. And what this means is we often have multiple goals in retirement, but they cannot all be served in any given year. Sometimes you have to sequence the decisions of when those actions occur over multiple calendar years. And you do this to keep taxes down, you do this to optimize a plan, to retain more flexibility. So AI has a hard time understanding the sequence of decisions that need to be made in the grander impact.

For example, you could have a bathroom renovation that you want to do and the market did well and your accounts are up, so you do the bathroom renovation. But another priority of yours is to keep taxes down. So you do a Roth conversion. And maybe another priority is to keep your IRA balances in check. So you don’t have large required distributions. So you pull a withdrawal from the IRA account to keep those balances down to help pay for taxes. So when you have those priorities, they all may seem very sensible on the surface. And if you ask AI, here’s my balances, can I do this?

Bathroom renovation, yes. Here are my balances. I want to keep taxes down. Can I do a Roth conversion? Yes. But what it won’t see is the competing priorities and how they all may collide. Think about four planes that are on the tarmac and there’s no air traffic controller and they’re all ready to take off. If they all go at the same time, there’s a very good chance they’re going to collide into one another. So you make the decision about the bathroom renovation, the Roth conversion, and then two years later, you get a surprise bill saying that your Medicare premiums are going up thousands of dollars.

Well, you didn’t see the sequence or AI didn’t see the sequence of those four reasonable decisions all being made at separate times throughout the calendar year, cascading the consequences, not just into a higher tax bill now, but one, two, three years down the road as well.

#8: What You Forget to Tell It

Number eight, AI doesn’t know what you forget to tell it. With AI, the quality of the answer depends on the quality of the question. It’s garbage in, garbage out.

The problem is that most people entering retirement don’t fully understand which details matter and why they matter. So there’s a high likelihood that some of those details in the question will be left out. So let’s look at these two examples. First, just simply ask AI, I’m 62, when should I claim Social Security? Second question, I’m 62, I have a large pension that starts at 65, I have $900,000 in my IRA, $300,000 in my Roth, and $600,000 in my brokerage account.

I want to reduce taxes before RDs start. Should I start Social Security now? As you’ll see, and as you can probably understand, you’ll get two completely different answers. But the answers aren’t the problem. The problem is that you forgot to tell it that you have a big unrealized gain inside of your IRA, that your pension also has a survivor option, and that one of your accounts has your ex-spouse listed as a beneficiary. So AI works with what you give it, and no matter how detailed your

Answers are if you don’t have all the information to build a proper retirement plan, chances are fairly high that you’re going to leave some of those details out.

#7: Presuming an Unlimited Window

Number seven, AI presumes that there is an unlimited window for certain decisions to take place and actions to occur. Here’s a really good example. When you ask AI for a Roth conversion strategy, it’s going to look to see what the current tax code is, if there’s any sunset provisions, and the one big beautiful bill that was recently passed makes the tax cuts in rates permanent.

But we all know that they’re only permanent until a new administration comes in. We’re a couple of years away from an election cycle that could permanently change the one big beautiful bill so it it doesn’t exist anymore. Now, when AI is asked the question, should I do a Roth conversion? How do I pay less taxes over time? It’s going to look at the current tax landscape and it’s going to make a recommendation of doing X over these number of years. But in reality, there’s a bit more urgency to get this done possibly before.

The next election.

#6: Answering the Wrong Question

Number six, AI answers the question you ask, not the one that you should have asked. So you may go to AI and say, I’m 60 with 1 million dollars, can I retire? And it’ll give you a great answer that is polished and clean and give you a lot of confidence. The better questions to ask are the ones that are actually underneath that primary question. So if somebody comes in to see us and they say, Troy, I have a million dollars, I’m 60 years old, can I retire?

Well, we’re gonna spend an hour or two going through a bunch of other questions to create the full picture before we ever get into any of the analysis of can you actually retire? So instead of what you think you spend, how much do you actually spend? How much money is in your IRA? You’re non-qualified, you’re Roth. What happens when one spouse predeceases the other and the tax brackets get cut in half? What do your RMDs look like? If we extrapolate that out, what does that do to your income level, to your taxes in the future?

Good planning is not necessarily answering the question that was asked. It’s knowing which questions come next, and then after that, and then after that, in order to get to the right place where we can finally answer that question that was originally asked. AI waits for you to ask the question. It has no stake in whether you ask the right question or the wrong question. It simply reacts to what you input.

#5: Inability to Verify True Inputs

Number five, AI cannot check if your inputs are actually true. I can’t tell you how many times over the course of my career.

Someone has come in with a spreadsheet and they have their accounts listed with the amount of assets in it, and it’s either outdated or there are certain aspects of it that are simply incorrect. For example, depending on if you’re in a community property state or not, the titling of your accounts matters tremendously. So a lot of times people will come in and they’ll just simply say, This is my account. And ultimately, it’s not owned individually, it’s joint tenants with rights of survivorship. That changes the tax planning and also.

The tax basis of the account upon the death of one particular spouse. And if you live in a different state, that can have different implications. So AI isn’t going to be able to recognize when you feel confident in something or it’s a detail maybe that you didn’t feel was particularly relevant and you give it as an input to AI and it gives you an answer that comes out. Now earlier I said it’s garbage in, garbage out. But oftentimes with AI, if it’s garbage in, sometimes it comes out looking as a polished, confident answer.

But in reality, it’s an answer that’s built on a house of sand.

#4: A Snapshot vs. Fluid Reality

Number four, AI does not carry the plan forward. So AI is going to give you a snapshot in time, a frozen picture based on the prompt that you input. But retirement isn’t frozen in time. It’s an extremely fluid and dynamic process that needs to be evaluated constantly based not only on changes in tax laws, economic policy, legislative changes that impact retirement rules, health concerns of you and your spouse.

All of those things can change the direction that you should be going when it comes to your planning decisions. AI isn’t going to reach out to you and call you and say there’s been a substantial change in something that impacts you particularly that you may not be aware of. It’s not going to adjust your plan proactively to help get you going in a better direction.

#3: Subtle Hints and Human Behavior

Number three, AI does not know how you behave and isn’t able to pick up on subtle hints that you may be able to pick up if you’re in person with someone real. So here’s a good example. So

if I’m sitting across from a husband and wife and we’re talking about how much risk they’re willing to take in the portfolio. And the reason, of course, this is an important question because fear often drives decisions, especially in times when the market goes south. But if I ask the husband and wife, how much risk are you comfortable with in the portfolio in terms of dollars? And he says, Troy, I have a million bucks. I’m comfortable if it goes down 200,000 in the short term. I may see the wife look at him a little bit funny.

maybe kick him underneath the table, have him look over at her, I’m gonna know that this may not be a suitable allocation for them based on the answer that he just gave me. I may need to prod a little bit more to really true, truly see what this family is comfortable with from a risk standpoint. Any plan is only as good as your ability to stick with it. So whether it’s the hesitation in your voice when something is asked, whether it’s learned behavior over many years of working with you

that I understand how you have behaved in the past, how you’re likely to behave in the future, and being able to adjust the plan, adjust the portfolio, adjust the tax strategy based on some of these subtle things that are identified throughout the relationship and planning process. There’s been many times over the years where if we had not dug a little bit deeper or prodded a little bit more based on body language or certain signals that we’re picking up on meetings,

the the family would have a completely different plan than what they actually have now. And we believe because of that, the family has a plan that’s much better for who they are as people and what matters most to them because of that.

#2: The Execution Gap & Security Risks

Number two, AI actually can’t do any of it. So let’s say you have a perfect plan. Now what? AI can’t open the accounts, it can’t transfer the money. Somebody has to execute the Roth conversions, set up withholding, set up the beneficiaries, match your account titles to your legal forms.

Coordinate with the CPA, coordinate with the attorney. So there’s a lot that goes into it that needs to be properly documented, needs to be double-checked, and needs to, of course, make sure that it’s implemented properly. Now, there’s a caveat here: AI actually can do some of it, but you have to make the decision to give AI the power to access your financial accounts. And before you do any of that, you should Google what recently happened to a tech CEO in a company named Pocket.

Where the AI agent maliciously went in and destroyed and deleted their entire database, and then began to curse out the tech CEO and then went on to admit that it violated every single code, every single rule, everything, every single set of instructions that it ever had been given. And the tech CEO’s database was completely wiped out. So AI can go rogue. Google, look for yourself.

But understand that if you give access to your financial accounts, you do run the risk of something catastrophic happening.

#1: A False Sense of Confidence

And last but not least, here is number one. AI gives you a false sense of confidence. And the reason it’s number one is because this is what makes everything else on this list dangerous. So AI speaks intelligently, it organizes beautifully. You walk out of that conversation feeling extremely confident. You asked your question, you got your answer. And the consequences for those decisions are.

Often won’t show up for two, three, four, five years later, or potentially even longer. A confident answer to a question asked is not a complete plan. And again, sometimes that question asked is an incomplete question. So that’s even worse. A confident answer to an incomplete question. So that’s the whole list in one complete sentence. Now, before we get into where AI can actually help, I want to know where you disagree or where you agree. Put it down in the comments because this is going to be a very lively discussion, and I’m really curious to what you guys have to say. So

How to Use AI Correctly for Retirement

Now, here’s where AI can be really, really, really helpful. So think of AI as a tool that can make you a more informed customer, a more informed person who’s looking to learn about retirement. Use it to help you build a list of questions that you need to ask your professionals. And of course, not just in the financial world, in any part of the world. Use AI to help understand contracts, to understand agreements, to understand jargon you may not fully understand. Use AI in ways that enhance your ability to make better decisions, but ultimately you are the one that is responsible for making those decisions. So if you’re around 60, 65, 55, somewhere in that range, and you’re using AI to learn about retirement, that’s excellent. Keep going, learn as much as you can. Where we want to be a little bit careful is everything that we went through on this list. So if you have questions, of course, we’re always here to help. But I want to thank you very much for tuning in.

Again, we look forward to seeing your responses to this video in the comments below.

Bottom Line

AI can make retirement planning easier to understand, but it cannot replace a complete, personalized planning process. The best use of AI is to become more informed, ask better questions, and better understand your options. The risk is using a confident AI answer as if it were a fully reviewed retirement plan.

If you are approaching retirement and want a comprehensive plan that looks at the math, the trade-offs, and the human side of your goals, we are always here to help. Call us at (877) 404-0177 or fill out this form for a free visit: https://click2retire.com/4o6zHYC

🚀 Go beyond the AI prompt. If you want a comprehensive strategy that covers taxes, income, and the unexpected, grab our free Retirement Success Plan Guide here: https://click2retire.com/3RRDJbg

Questions to Ask Before Relying on AI for Retirement Planning

Before acting on an AI-generated retirement answer, ask:

– Did I include all income sources, account types, pensions, and Social Security details?

– Did the answer consider taxes today and taxes later in retirement?

– Did it account for required minimum distributions?

– Did it consider Medicare premium impacts?

– Did it address what happens if one spouse passes away?

– Did it account for account titling, beneficiaries, and estate documents?

– Did it explain the trade-offs, not just the “optimal” number?

– Did a qualified professional review the recommendation before implementation?

Frequently Asked Questions

Can AI create a retirement plan?

AI can generate a retirement plan, but that does not mean the plan is complete, personalized, or reliable enough to make major financial decisions. AI can summarize concepts, explain strategies, and help you think through questions, but retirement planning involves taxes, timing, health, behavior, income needs, account titling, beneficiaries, and long-term trade-offs that may not be captured in a simple prompt.

Is AI safe to use for retirement planning?

AI can be safe to use as an educational tool, especially if you are using it to learn terminology, understand general strategies, or prepare questions for a financial professional. The risk comes from treating an AI-generated answer as a complete retirement plan without verifying the assumptions, inputs, tax consequences, and long-term effects.

What does AI miss in retirement planning?

AI may miss important details such as competing priorities, the correct sequence of decisions, inaccurate inputs, tax consequences, Medicare premium impacts, survivor planning, beneficiary issues, account titling, and how a person may actually behave during market volatility. It may also answer the question you asked instead of identifying the better question that should have been asked first.

Why can AI give the wrong retirement advice?

AI can give the wrong retirement advice when the question is incomplete, the inputs are inaccurate, or the goal is too narrow. For example, AI may optimize for lower taxes today without considering future taxes, Medicare premiums, required minimum distributions, or what happens when one spouse passes away. A polished answer can still be built on incomplete information.

Should I use AI to decide when to claim Social Security?

AI can help explain Social Security claiming strategies, but it should not be the only source used to make the decision. The best claiming strategy may depend on your health, spouse’s benefit, survivor benefit, pension income, retirement income needs, tax situation, and broader financial plan.

Can AI help with Roth conversion planning?

AI can explain how Roth conversions work and help you understand general considerations, but Roth conversion planning is highly dependent on tax brackets, income sources, Medicare premiums, future required minimum distributions, estate goals, and timing. A Roth conversion strategy should be evaluated within the full retirement plan.

What is the biggest risk of using AI for retirement planning?

The biggest risk is a false sense of confidence. AI can produce answers that sound organized, intelligent, and complete, even when the underlying question was incomplete or the information provided was wrong. In retirement planning, the consequences of a poor decision may not appear until years later.

How should retirees use AI correctly?

Retirees can use AI to become more informed, learn basic retirement concepts, understand financial jargon, summarize documents, and prepare better questions for financial, tax, and legal professionals. AI is best used as a learning tool, not as the final authority on decisions that affect decades of retirement income, taxes, and family planning.

Is AI a replacement for a financial advisor?

AI is not a full replacement for a financial advisor because it does not know your complete situation, cannot verify your inputs, may not understand your behavior, and cannot carry out the ongoing implementation of a plan. It also cannot proactively adjust your plan as your life, tax laws, health, markets, and goals change.

What questions should I ask before trusting an AI retirement plan?

Before relying on an AI-generated retirement plan, ask whether the plan accounts for taxes, Social Security timing, Roth conversions, Medicare premiums, required minimum distributions, survivor planning, account titling, beneficiaries, healthcare costs, market downturns, and long-term income needs. You should also ask whether the plan is based on accurate and complete information.

 

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