I Let AI Design My Path to Financial Independence -- Here's What Shocked Me

I have become increasingly concerned about the future of my writing career amid rapid advances in AI. That's causing some angst about the potential impact AI disruption will have on my income. This worry is driving me to focus on becoming financially independent as fast as I can.

I decided to turn to my potential nemesis (Anthropic's Claude) to help me craft a plan to prepare for a deep income drop. The results shocked me. Here are the three most surprising things I learned.

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I'm closer to coasting than I realized

I started by asking Claude to act as a financial advisor to a married couple with my financial situation and profession who wanted to reach financial independence in five years or less to relieve the financial anxiety of a potential future job loss. What I learned was that, while it wasn't mathematically impossible, it would take some serious budget cuts to reach, using conservative estimates of returns (7% average nominal return) and withdrawals (3.5% withdrawal rate for early retirees). One of the biggest obstacles is that a bulk of our net worth is in IRAs, most of which my wife and I can't touch penalty-free until we're 59 and a half (more than a decade away).

However, Claude proposed a more realistic solution: Coast FI. It's a stage of financial independence where your current investments are large enough to grow into a full retirement nest egg by the normal retirement age through compounding alone. Once you hit that number, you don't need to make any additional retirement contributions.

What shocked me is that I've already saved enough to reach my coast number, with a margin. Claude told me, "This is the single most important thing to internalize: you are not behind, and you don't need to grind at full income for 5 more years to be secure at 59.5." Instead, what I need to focus on is building a bridge to that year.

I need to transition from retirement funding to bridge building

The surprising reframe for me is that I need to focus on building a bridge to retirement as I enter a period of heightened income uncertainty due to AI disruption. That's where my regular brokerage account and my Roth IRA become my biggest assets. While I can't withdraw any gains from my Roth until I reach 59 and a half, I can withdraw my original contributions. I'm not currently maxing out my Roth IRA contributions because I'm focusing on maxing out contributions to my tax-deductible SEP-IRA and my wife's traditional IRA. Maxing out my Roth can help me build my bridge to 59 and a half, as I can tap into this capital if needed while the gains continue to compound tax-free.

The other big thing I learned while working through my coast plan with Claude is the power of building passive income for the bridge phase. Between dividend income from my brokerage account and passive income from real estate, I'm currently producing enough income to cover about a quarter of my family's annual expenses. The more I grow this amount, the less capital I'll need to accumulate in the bridge phase.

That's leading me to double down on dividend stocks in my brokerage account while focusing more on growth stocks in my IRAs. One easy way to do this is to lean into a top dividend ETF, such as the Schwab U.S. Dividend Equity Fund (NYSEMKT: SCHD). The ETF holds 100 top dividend stocks, screened for several quality characteristics, including yield and five-year dividend growth rate. The fund's current yield is 3.3%. At that rate, every $1,000 I invest in the fund will generate $33 of annual dividend income. Just as important, the Schwab U.S. Dividend Equity ETF has grown its payout at a compound annual rate of more than 11% over the past decade. That income growth will help me build a stronger bridge.

I should start tapering on my own terms

The final thing that surprised me during my interactions with Claude about building a financial independence plan was that I should go out on my own terms, not wait for an abrupt, AI-driven end to my writing career. It suggested a phased, milestone-driven plan to become work optional before I reach 59 and a half. The plan maintains the status quo of working max effort for the next several months to build a larger bridge fund, because that's the highest-confidence earning window I have. I can then start tapering, first to 80% of my current income (already more than covered by passive income), then to 50%, and finally make work optional as I reach milestones in building my passive income and bridge fund. Even if I lose my current job during the taper period, I should be able to find a new career that covers my remaining expenses until my bridge fund fully takes over.

AI went from an anxiety trigger to a calming voice

I turned to AI to help me craft a financial independence strategy that can help alleviate some of the anxiety I feel as I see its disruptive power on my profession. I came away from that surprising experience with an action plan designed for my situation. While it isn't tax-efficient, it will help me sleep better at night knowing that I control my financial future, not some algorithm.

Matt DiLallo has positions in Schwab U.S. Dividend Equity ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.