More than half of Americans use artificial intelligence to help make financial decisions — and that may not be a bad thing. A new study found that people who use AI tools are more likely to save for retirement, though the researchers noted some important caveats.
The paper, published last week in the journal Financial Planning Review, found that workers who consulted AI tools were 75% more likely to save for retirement than those who did not seek retirement advice from any source.
The study – which did not differentiate between algorithmic investment tools such as robo-advisors, general-purpose chatbots and AI agents of financial providers – also looked at how working with financial planners influenced people’s saving behaviour. People who consulted financial planners were 181% more likely to save for retirement than those who did not. People who use both human and AI technology are 254% more likely to save for retirement.
Eric Ludwig, director of the Center for Retirement Income at The American College of Financial Services and one of the study’s authors, says people can benefit from the speed and accessibility of AI and sophisticated guidance from experts.
“What we thought was that AI and human advisors were doing two different jobs,” he said.
Not everyone can afford, afford or have access to a personal mentor. For employees who can’t turn to a financial expert, experts say the research makes a strong case that chatbot advice can be better than no advice at all in certain situations.
“The common AI platforms that people use in all kinds of alternatives have some advantages in helping people go through goal setting and situational assessment,” said Michael Foy, managing director and head of wealth intelligence at JD Power.
Deciding whether AI can help you with a particular part of your finances depends on what you’re trying to achieve, Ludwig said.
“It’s a complex thing. If it’s a simple, straightforward problem … using AI versus an off-source is better,” he says.
But AI in general and chatbots in particular have their limitations, he adds. AI tools make it easy to ask questions and get answers in plain English, which makes them popular, but AI can make mistakes or fix things.
Ludwig says that “what advisors are good at is asking all the right questions” to figure out, say, how much your 401(k) should be in stock if you’re three years from retirement with one child in college and ten years left on your mortgage. On the other hand, Chatbots are trained to respond with answers, not other questions, so the advice you receive may not be complete or suitable for your particular situation.
Another sticking point is that the granularity of information a financial advisor may need to give you the best advice is the type of information you should be careful about typing into the information box.
“My concern is that sometimes we treat AI as an independent advisor,” said Ludwig.
In fact, you should not consider privacy expectations when interacting with chatbots.
“You have to be very careful about personally identifiable information,” says Foy. “It’s a double-edged sword. On the other hand, the more information you can provide about yourself, the better answer you will get.”
But you don’t want to overshare and make yourself vulnerable to phishing attacks or identity theft. To do a gut check, Ludwig says you should ask yourself: Can you easily announce this information on your social media accounts or post it on a bulletin board at work? If the answer is no, you probably don’t want to share it with AI, either.
How to get safe, helpful retirement advice from AI
If you’re going to ask AI for help with retirement planning, proceed with caution. Ludwig and Foy say there are a few guidelines to keep in mind.
Do not share personal information. This includes your full name, date of birth, address, phone number and Social Security number and your bank, brokerage or retirement account information, including account numbers and login information.
Experts also advise against sharing your exact income, account balances and tax return information, which can be exploited by fraudsters.
“Maybe you can get comfortable with things like percentage offers. Dollar values would make me more concerned,” Foy said.
Ask the bot what it needs. If you’re using a general-purpose chatbot like ChatGPT or Claude, Foy suggests using prompts that state your question — for example, “Will I have enough money saved to retire in 20 years?” — then asks the bot what information can help you answer it.
Just remember to use round numbers to avoid revealing sensitive financial information. For example, “I contribute about $1,000 a week to a 401(k) with a current balance of about $125,000,” is sufficient.
Use the resources of your retirement plan. Foy points out that many retirement plan managers have added AI capabilities. If you have a 401(k) or IRA, see what tools the platform offers.
Nearly 2 in 3 employees surveyed by financial services platform Savvi Financial said they would trust AI-generated financial advice from their employer’s retirement plan.
There’s a good reason for that, Foy said. AI within your retirement plan has an advantage over general-purpose AI like ChatGPT because it can access personal data, such as your complete account statements, that you shouldn’t share with a chatbot.
Take the answers with a grain of salt. “None of these platforms have established responsibility,” Foy said – meaning that if you follow bad advice, the chatbot is not responsible for the consequences involved. Certified human financial planners, on the other hand, are required by law to provide financial best interest recommendations.
While AI can be useful in terms of providing insight that you might not get from talking to your partner or spouse, treat it the same way—as another opinion, not concrete recommendations.
Foy says: “It’s wise to consult with them but don’t make decisions based on information from that one source.
