Summary of this article
As AI threatens many white-collar jobs, workers must act now to protect their retirement.
One needs to build a larger emergency fund, diversify income, and reskill to stay employable.
Besides, reassess retirement timelines, and possibly delay the retirement.
A disruption in income in early working life can make a huge deviation in the size of your planned retirement corpus. So, job stability is crucial for building a robust retirement corpus. However, there is a job risk looming globally as Artificial Intelligence (AIs) are taking away several white-collar roles. For example, content creation, video editing, bookkeeping, data entry, computer programming, etc., are now considered to be jobs that are at the highest risk. Many people have recently lost jobs due to increased adoption of AI, and it is also expected that a large number of people may continue to lose jobs in the coming years. So, it’s crucial to check your financial ability to offset the AI-induced job risk. Here are 3 things you can do to shield your retirement plans from income disruption due to AI.
Strengthen Your Emergency Fund
Don’t wait for your income to go down or a job loss; start saving more to build a bigger emergency fund. An emergency fund can help you reorganise your finances and explore ways to generate income if your job is abruptly lost. If you are in the starting stage of your career, then you may have more time for adjustments and to find a new job. However, if you are in the middle stage, you need reskilling to stay employable. A bigger emergency fund can help you to get a time extension for reskilling. If you are in the last leg of your career, a bigger emergency fund can help you keep your retirement corpus intact if you lose your job.
Diversify Your Income And Reskill For AI Adaptation
If you are in a job or profession that is expected to be disrupted by AI, you must diversify your income without delay. Even a small income stream can give you a big financial cushion at a later stage. Reskilling can definitely help, and it can also help you save your job. Ideally, you should try to do both to mitigate the AI risk, which means diversifying income and reskilling.
Reassess Your Retirement Plan
You must reassess your retirement plan depending on the extent of expected AI impact on your career. If the AI impact is severe, you may take steps like delaying your retirement and extending your career by a few years. If the AI impact is not significant, you should still remain proactive and take steps like saving more, diversifying income sources, and reskilling.
With AI risk all around, you must avoid new loans and unnecessary expenses till the time you are sure that your income is not at risk and you can achieve your retirement goals on time.
The author is an independent financial journalist
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
