There’s plenty of uncertainty around retirement. When is the perfect age to retire? How much money do you need to retire? These are the types of questions you’re likely to have when planning out your golden years.
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But what’s one of the biggest myths people hear about retiring? GOBankingRates asked ChatGPT for its take on the subject. Here’s what it said.
Some Key Statistics About Retirement
Before jumping into ChatGPT’s response, here are a few statistics about retirement that you might not know.
According to the 2024 MassMutual Retirement Happiness Study, the average retirement age in the U.S. is 62. This is a year younger than the ideal retirement age.
While most current retirees (60%) view retirement as a time to leave the workforce behind, roughly a third of those (38%) who haven’t yet done so see it as the time to shift focus to something more fulfilling or to work less.
Last but not least, 35% of pre-retirees believe they don’t have enough savings to retire on schedule. Another 34% are considered they outlive their retirement savings.
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The Biggest Retirement Myth, According to ChatGPT
GOBankingRates fed the following prompt — “What’s one commonly told myth about retiring?” — to ChatGPT. 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 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:
- 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 recent Federal Reserve Economic Data, which found that those ages 65 to 74 spend an average of $65,149 annually. This would include anyone born between 1951 and 1960.
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 it, 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 that retirees often spend either the same amount or more than they did while working. According to it, these are the main areas where costs tend to increase beyond what people expect:
- Travel and leisure
- Healthcare
- Supporting family financially
- Inflation
Much of this tracks.
For example, a 2024 TransAmerican Institute study found that 59% of people dream of traveling after they quit working. For those who might not have traveled before retirement, this could easily add hundreds or thousands of dollars to their annual expenditure. Hobbies, entertainment and other leisurely activities can also add up in terms of costs.
Healthcare, as ChatGPT pointed out, can be expensive — sometimes unexpectedly so. Just last year, Genworth and CareScout found that the average cost of long-term care is:
- $70,800 for an assisted living community
- $26,000 for adult day care
- $77,792 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.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT One Commonly Told Myth About Retiring — Here’s What It Said
