The secret to a great retirement: Think like an engineer

AI in Financial Planning - AI is a brilliant and powerful tool for general financial education, but caution is advised for personalized financial advice due to potential inaccuracies and the fact that LLMs were not originally designed for math [1] - Prompt engineering is crucial when using AI for financial planning, as investors need to know the right questions to ask, especially with complex topics like taxes [1] - Betterment's financial advisors are currently using AI with clients, but not yet for retirement planning calculations [2] Investment Strategies and Trends - Betterment is a proponent of investor choice, including alternative assets like private equity and private credit, but advises caution and transparency, suggesting investors avoid allocating a large portion (e g, 50%) of their nest egg to alts, especially in 401(k) plans [2] - Political uncertainty is causing some investors to become nervous and hold onto cash longer than usual, though most are not panicking or selling off their retirement portfolios [3] - Redirecting savings towards paying down debt, such as mortgages with rates around 7%, can be a good alternative for investors nervous about the stock market [5] - Goals-based investing, which ties assets to specific goals and time horizons, is a key strategy, with Betterment's UX designed to help clients define their goals and set up automatic savings plans with appropriate risk levels [16][17] Retirement Planning Considerations - A Roth conversion window exists between retirement and the start of Medicare, RMDs, and Social Security, offering a potential opportunity to convert funds while in a lower tax bracket, possibly up to the top of the 12% tax bracket [19] - Partial Roth conversions are generally preferable to full conversions to avoid bumping into higher tax brackets [20] - It's important to revisit Roth conversions regularly due to changing tax brackets, even if immediate action isn't necessary [20] - Financial advisors should identify inputs, calculations, and outputs to provide consistent and demystified advice, rather than relying on vague answers like "it depends" [21][22] - Betterment defaults to age 90 for life expectancy in retirement plans, erring on the conservative side to avoid the risk of running out of money [24]