Brittany Gunn
This article was originally published in the Spring 2025 issue of ICON/REFINED. Get your copy here.
Written by Brittany Gunn
Licensed Financial Strategist and founder of She Stays Invested Community
No one can stop talking about AI; it’s everywhere—over breakfast, in subways, on podcasts during the daily commute, at the office, and during weekend activities with friends. AI has rapidly become a part of the conversation, but what can it do for you? How can AI change your life in a matter of minutes? AI can now act as your assistant to make reservations for dinner, but can it be trusted to help handle your finances? What are the risks?
AI and Financial Planning: What Can It Do for You?
At a minimum, AI can help you evaluate your current financial plan and assess how on track you are to meet your goals. Let’s focus on one goal at a time: reviewing the savings and investing budget for someone who is 30 years old and recently bought a house and a car. Here’s a sample prompt for retirement at age 65, demonstrating how AI can calculate your retirement track:
Prompt:
“I’m [age] years old, a corporate employee earning $[annual salary] annually, with current investments of $[xx] in a Roth IRA, $[xx] in a rollover annuity, $[xx] in a 401(k) with a [xx]% employer match, $[xx] in an HSA, $[xx] in a HYSA, and $[xx] in an IUL. I have a $[xx]/month mortgage (30-year, no PMI) and a $[xx]/month car payment (for [x] years), plus additional monthly living expenses of $800-$1,200. My goal is to retire at age 65 with $4M. I want to use a balanced approach between aggressive and conservative investments. Could you help me design a detailed monthly contribution plan that meets my retirement goal of $4M and explain how to allocate any extra funds (e.g., for emergency savings/sinking funds)?”
The Potential Biases of AI in Financial Advice
AI may have biases when you ask for supplemental retirement options. In some cases, AI may prioritize maxing out your 401(k) or opening an additional taxable brokerage account before considering other options, such as real estate, owning a business, or perhaps an IUL. Additionally, not all AI systems know current contribution limits on retirement accounts, which could lead to inaccurate advice.
The Risks of Relying Solely on AI for Financial Planning
A risk of using AI is that a few models come with disclaimers stating they cannot provide financial advice and recommend consulting with a qualified financial advisor to create a personalized financial plan. When comparing the same scenario across different AI platforms, the findings were different by hundreds of dollars—almost $1,000. Although AI can crunch numbers, how do we measure its accuracy? Your results can vary depending on which AI assistant you use or how your bank trains its AI model. When it comes to retirement planning, accuracy is crucial.
AI’s Evolving Role in Financial Planning
We are still in the early stages of understanding what AI can accomplish, but it’s rapidly learning from user feedback. While AI is still evolving, there are many tasks it can help us complete, like establishing a budget and finding innovative ways to stick to it.
What would you do—would you trust AI to handle your household finances? What about your retirement?
How to Safely Use AI for Financial Planning
While AI can be a helpful tool in financial planning, it’s important to use it wisely. Here are some tips on how to safely incorporate AI into your financial strategy.
Use AI as a Supplement, Not a Replacement
AI can provide valuable insights and suggest strategies, but it should not replace professional financial advice. Consult with a certified financial planner for personalized guidance and to ensure you understand the nuances of your specific financial situation. AI can crunch the numbers, but human experts can offer a more comprehensive analysis that considers your long-term goals and lifestyle.
Double-Check Results
AI is only as good as the data it’s trained on. If you’re relying on an AI tool for retirement planning, compare its recommendations with those of different tools or financial advisors. If two AI models give you significantly different results, take the time to investigate why—differences in algorithms or assumptions might be at play.
Understand the Limitations
AI has the ability to analyze large datasets and provide predictions, but it doesn’t account for all variables—such as life events, market disruptions, or tax law changes. While AI can be a great starting point, always be aware of its limitations and factor in your unique circumstances when making decisions.
Check for Biases
AI systems can carry biases based on the datasets they were trained on. For example, an AI tool might prioritize certain investment vehicles (e.g., 401(k)s or taxable brokerage accounts) over others (e.g., real estate or alternative investments). Review multiple recommendations and seek diversity in the financial tools you use to ensure you’re not getting skewed advice.
Use AI to Track Progress, Not Make Every Decision
Consider using AI to track your financial goals and monitor your progress over time, but not to make every decision for you. AI tools can be especially helpful for tracking investments, suggesting ways to optimize savings, and providing regular updates on your progress toward retirement. However, major decisions like investment strategy or significant financial changes are better suited for human judgment.
Stay Informed
Financial planning tools, including AI, should be used in conjunction with staying informed about the basics of personal finance. The more you understand about investing, taxes, and budgeting, the more effectively you can use AI. Don’t rely solely on AI for education—read articles, books, or take courses to deepen your financial knowledge.
How AI Could Help with Your Finances in Even More Ways
AI isn’t just about retirement planning or tracking your expenses—there’s a whole world of ways it can make managing your money easier and smarter. Here are a few more ways AI can lend a hand in your financial life.
Automating Your Budget and Keeping Track of Spending
One of the easiest ways AI can help is by automating your budgeting. AI-powered apps can analyze your income and spending habits to create a budget for you. These tools will categorize your expenses, so you don’t have to spend hours sorting through receipts. For example, apps like Mint and YNAB (You Need a Budget) automatically track your spending and tell you how much you’ve spent on dining out or subscriptions. It’s like having a personal finance assistant that makes sure you’re not overspending without you lifting a finger.
Helping You Pay Off Debt Faster
Debt can feel like an endless cycle, but AI can help break it. AI tools can look at your various debts—whether it’s credit cards, student loans, or a car loan—and recommend the fastest, most efficient ways to pay them off. For instance, it could suggest using the “snowball” method (starting with the smallest debt) or the “avalanche” method (starting with the highest interest rate) depending on your goals. AI can even set up automatic payments or alert you if you’re about to miss a due date, so you never get hit with late fees.
Fine-Tuning Your Investment Portfolio
If you’re investing, you know that staying on top of market changes can be a full-time job. But with AI, it doesn’t have to be. AI-powered robo-advisors, like Betterment or Wealthfront, use algorithms to help build and rebalance your investment portfolio automatically. They take your risk tolerance and goals into account, making adjustments as the market shifts—so you don’t have to guess or try to time the market yourself.
Finding Tax Savings You Might Miss
AI can even help you save money on taxes by flagging deductions and tax credits you might not know about. Some AI tools can scan your financial data and suggest strategies to help lower your tax bill, like making contributions to tax-advantaged accounts or shifting investments. If you’re unsure whether a traditional IRA or a Roth IRA is the best fit for you, AI can also weigh the pros and cons and help you make the best choice based on your current and future tax situation.
Keeping Your Accounts Safe with Fraud Detection
One of the best ways AI is already helping in finance is by keeping your accounts secure. Banks and credit card companies use AI to monitor your transactions in real time. The system learns your usual spending habits and can quickly flag any purchases that seem out of the ordinary. For example, if your card is used in a different country or for a large transaction you didn’t make, AI can alert you right away, giving you a heads-up to catch any potential fraud early.
Offering Personalized Financial Advice
While AI isn’t a replacement for a financial advisor, it can still offer some pretty personalized advice. AI tools track your spending and saving behavior, and based on that data, they can offer suggestions tailored to your financial goals. For example, if you’re saving for a down payment on a house or planning for a vacation, AI can help you adjust your savings plan to meet your target. It’s like having a financial advisor in your pocket, without the hefty fees.
Helping You Stay on Track with Financial Goals
AI doesn’t just help you set goals; it helps you stay on track with them. Whether you’re aiming to pay off debt, save for a big purchase, or build an emergency fund, AI can track your progress and remind you of your milestones. It can also suggest tweaks to help you hit your goals faster, like adjusting your spending or redirecting some extra cash to savings. It’s a great way to stay motivated when your goals feel far off.