GOBankingRates recently asked ChatGPT to create a financial plan to help a 40-year-old save enough to live on $100,000 a year in retirement. Eric Franklin, CFP, managing principal at Prospero Wealth, reviewed the plan, and realized, “The math is literally wrong.”
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Is ChatGPT’s rival Claude better for retirement and Social Security planning? GOBankingRates generated a second plan through Claude, using the exact same prompt, and asked Franklin’s colleague at Prospero Wealth, Phil de la Motte, to compare the two plans and address the strengths and the weaknesses.
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Claude stood out in favorable ways where ChatGPT fell short, including factoring Social Security into the mix. “Claude also mentioned the value of delaying Social Security to age 70, while ChatGPT did not,” de la Motte said.
Claude also addressed tax brackets (assuming 22%), assumptions for future inflation rates, insurance costs (healthcare, disability), and health savings accounts and flexible spending accounts.
Overall, de la Motte said, “Claude beat ChatGPT in most areas … And I didn’t see anything significant that ChatGPT got, that Claude didn’t also cover.”
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That doesn’t mean you should rush out and fire your financial advisor in favor of generative artificial intelligence (AI). The shortcomings were huge. “Neither addressed risk tolerance or risk capacity; this is a big issue,” de la Motte said.
“Neither used Monte Carlo simulations to forecast the probability of retirement success. Instead, they used fixed perpetual positive investment returns, which is a huge problem, leading someone to vastly underestimate the size of the nest egg they need,” de la Motte said.
On the other hand, the fixed 4% withdrawal rate could lead to overestimating the nest egg needed. “Neither addressed the value of considering adaptable spending strategies,” he said.
Noting that he wouldn’t rely on Claude to make irreversible financial decisions or other major life decisions, de la Motte warned, “It’s clearly missing quite a few things a good planner would immediately notice.”
However, with the right prompt, de la Motte admitted that speaking to an AI program could be “a good place to start,” especially if you haven’t thought much about retirement savings at all.
