I Asked ChatGPT How to Retire on Less Than $40,000 a Year — Here’s the Plan It Gave Me

Retirement planning has become one of the biggest financial puzzles of modern life. Costs are rising, savings are shrinking, and many Americans are wondering whether they can ever afford to stop working. For those living on modest incomes, the question feels especially urgent — how do you stretch limited savings into decades of stability?

Curious to test whether artificial intelligence could provide a practical roadmap, I turned to ChatGPT. I gave it a simple prompt: “Build a complete retirement plan for someone living on less than $40,000 a year.” The goal wasn’t to find magic shortcuts but to see whether AI could cut through financial noise and deliver a grounded, step-by-step strategy.

Within seconds, ChatGPT produced a surprisingly structured outline — part financial analysis, part lifestyle shift. It treated the problem not as a math exercise but as a balancing act of priorities, trade-offs, and creative thinking.

Its advice was practical, sometimes blunt, but ultimately optimistic. Here’s the plan it gave me — and what it reveals about retiring on less than many Americans earn in a single year.

1. Facing the Reality

The first thing ChatGPT did was set expectations. Retiring on under $40,000 a year, it noted, is absolutely possible — but not without adjustments. According to the U.S. Bureau of Labor Statistics, the average retired household spends about $53,000 annually, meaning anyone targeting $40,000 will need to live below that national average. It began by breaking down what most retirees actually spend money on: housing, healthcare, food, transportation, and leisure. Housing typically eats up nearly a third of total expenses. ChatGPT emphasized that downsizing or relocating to a lower-cost region could free up thousands each year — often the difference between struggling and living comfortably. Healthcare was the next big factor. The AI highlighted the importance of budgeting not just for premiums but also for unexpected medical costs, pointing to Medicare Advantage plans and Health Savings Accounts as crucial tools. “Your health,” it noted, “is both your biggest expense and your biggest investment.” By the end of its assessment, the message was clear: success depends less on income and more on adaptability. Those willing to change their living arrangements, rethink leisure, and manage healthcare proactively have a realistic path forward.

2. Building the Budget

The next phase of ChatGPT’s plan focused on structure — a monthly budget that could make retirement feel stable, not stressful. The model divided $40,000 into manageable categories: $1,500 for housing, $500 for healthcare, $400 for transportation, $350 for groceries, and roughly $1,000 left for everything else. It recommended automating as much as possible — fixed payments for utilities, insurance, and subscriptions — to reduce the stress of monthly tracking. The AI also stressed the value of consistency: “If you know exactly where your dollars go, you regain control even when income feels limited.” One particularly interesting suggestion was the concept of “micro-hustles” in retirement — flexible side work such as consulting, tutoring, or part-time creative projects. These not only boost income but provide purpose and structure. Even $300–$500 a month, ChatGPT calculated, can add $6,000 annually, effectively raising your retirement income by 15%. Finally, it warned against the emotional trap of deprivation. Cutting costs shouldn’t mean cutting joy. Small indulgences — local travel, family dinners, or community hobbies — keep retirees motivated to stick with their plan. “Budgeting works best,” ChatGPT explained, “when it feels like freedom, not punishment.”

3. The Long Game

In the final section of its plan, ChatGPT zoomed out. Retiring on a limited budget isn’t just about dollars — it’s about designing a sustainable lifestyle. It proposed a three-part mindset shift: simplify, stay healthy, and keep learning. Simplification means living with intention. Downsizing to a smaller home or apartment can reduce stress and expenses, while maintaining proximity to affordable healthcare and public transport. ChatGPT also recommended exploring retirement abroad, citing Mexico, Portugal, and Thailand as examples where $40,000 can feel like $80,000. Health, it argued, is the best investment multiplier. Preventive care, walking groups, and healthy home cooking not only save money but improve quality of life. “Every avoided medical bill,” it noted, “is compound interest in disguise.” Lastly, the AI emphasized ongoing adaptation. Expenses change, life changes, and so should the plan. Retirees should revisit their budgets quarterly and use online calculators to track how inflation, savings withdrawals, and healthcare costs interact over time. “You don’t need to be rich to retire well,” it concluded. “You need to be consistent.”