ChatGPT Explains the Retirement Myth Catching Many Off Their Guard
There's plenty of uncertainty around retirement. When is the perfect age to retire and how much money do you need? These are the types of questions you're likely to have when planning out your golden years.
But what's one of the biggest myths people hear about retiring? We asked ChatGPT for its take, and here's what it had to say.
I'm a Financial Planning Expert: Here Are 3 Ways ChatGPT Can Save You Money
Be Aware: 8 Low-Effort Ways To Make Passive Income (You Can Start This Week)
The Biggest Retirement Myth, According to ChatGPT
We fed the following prompt to ChatGPT: "What's one commonly told myth about retiring?"
The simple response? "You'll spend much less money in retirement."
This is interesting because it's the opposite of the most recent federal data. According to data from the Bureau of Labor Statistics, which assessed the typical annual expenditure by age group in 2023, here's what people normally spend in a year (based on the year they were born):
1997 or later -- $52,891
1981 to 1996 -- $81,589
1965 to 1980 -- $95,692
1946 to 1964 -- $70,207
1945 or earlier -- $49,206
This is, however, about on par with Federal Reserve economic data, which found that those ages 65 to 74 spend an average of $65,354 annually. This would include anyone born between 1951 and 1960.
Learn More: Enter for a Chance To Win $500 in MoneyLion's Summer Break Giveaway (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
There May Be Some Merit to ChatGPT's Response
While the numbers are conflicting, there are sound reasons behind the AI tool's response. According to ChatGPT, many people think they'll spend less in retirement because they won't have to pay for:
A mortgage
Commuting costs (transportation)
Work-related expenses
However, AI suggested retirees often spend either the same amount or more than they did while working. These are the main areas costs tend to increase beyond what people expect, according to the chatbot:
Travel and leisure
Healthcare
Supporting family financially
Inflation
Healthcare, as ChatGPT pointed out, can be expensive -- sometimes unexpectedly so. Just last year, CareScout found the average annual cost of long-term care is:
$74,400 for an assisted living community
$34,675 for adult daycare
$80,076 for an at-home health aide with personal assistance
And then there are other costs, like insurance premiums, that need to be considered. These can rack up and fast.
The other two areas -- inflation and supporting family -- can also be costly. The cumulative rate of inflation from 2015 to 2025 was 36.1%. This means that items cost this much more today than they did a decade ago. For those expecting to spend several decades in retirement, costs can rise substantially.
As for supporting family, some retirees end up helping out their children or grandchildren financially. Depending on their needs, this can also become a greater-than-anticipated financial burden.
What Can You Do To Prepare?
When asked what pre-retirees can do to prepare for potentially higher costs, ChatGPT's response was straightforward:
"Account for these potential costs instead of assuming spending will automatically decrease."
As for how to do this, the AI suggested:
Create a 6 to 12-month emergency fund and keep it in a high-yield savings account
Budget for healthcare and related costs (consider getting long-term care insurance or a health savings account)
Diversify your income sources
Have a clear, sustainable withdrawal strategy for when you retire
Get the insurance you need (homeowners, auto, etc.)
Plan for inflation
Downsize and pay off debts before retiring
Get your estate in order, including your will and any other legal documents
Set boundaries for how much you'll financially support your loved ones
It can take some time, but getting started now can help set you on the right track to retiring when you want to -- without the stress of costs you can't afford.
To help Americans navigate the added cost of summer, MoneyLion is giving away $1,000 every day through July 4. Enter the Summer Break Giveaway here (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: