AI and Social Security, Retirement Planning: Cool, but be Careful! - MoneyWatch
Artificial Intelligence (AI) is here, and has been for some time. It’s not new, but the concept and its tools are hitting us at an exponential rate as more innovators push for more ways to incorporate AI technologies into business practices. It makes sense, then, that the very serious subject of retirement financial planning should be ripe for AI models to help make critical decisions during that critical life phase. Doesn’t it?
Indeed, “Americans are already turning to AI for financial advice,” says MoneyWatch managing editor Aimee Picchi in a recent post on their website. In her post, Ms. Picchi notes that many technology experts consider AI an acceptable starting point for basic retirement questions. She observes that other experts, including Boston University economist and retirement expert Laurence Kotlikoff, express reservations about AI’s accuracy and ability to make sound decisions in areas as nuanced as Social Security and the federal tax structure. Citing his experience using AI to address specific retirement-planning questions, Kotlikoff observes that AI “…often provides incorrect information in projecting Social Security scenarios, which can be highly complex given the federal program’s 22,000 pages of rules.”
Ms. Picchi’s article also recaps remarks from MIT Sloan School of Management finance professor Andrew Lo, suggesting that “AI struggles with tax optimization, doesn’t understand regulatory nuance, and — unlike a human financial adviser — isn’t subject to legal requirements, such as acting in a client’s best interest.”
For those beginning to consider detailed plans for retirement financing, AI may in fact offer valuable assistance, but the importance of being careful and ensuring a complete understanding of the assumptions used by the tools to suggest courses of action cannot be understated.