The coming of AI (Artificial Intelligence) apocalypse for white collar workers: Why it’s even more important than ever to plan for FIRE (financial independence retire early) these days!
Earl Nightingale: “As in all successful ventures, the foundation of a good retirement is planning.”
As an early retiree, the advent of the AI (artificial intelligence) age has been a huge boon to my portfolio. Who would’ve guessed just 10 years ago that a company that makes gaming graphics cards, NVIDIA, would become the world leader in the field?
I have to admit that I am only somewhat responsible for picking this company to my portfolio, as this company was included in one of my mutual funds which I’ve owned since around 2009. The fund portfolio manager (Steven Wymer) deserves most of the credit here, as he had the foresight to buy this company at an early stage of AI revolution.
I do deserve some credit for choosing this particular mutual fund out of around 20 different ones in my company’s 401k plan though. Why not let the pros do what they do, and just reap the rewards of their investment strategy and savvy?
Sometimes luck does play a role in investing success, I admit that. I was lucky that I picked this particular mutual fund at the time without fully understanding what some of these companies actually do…
As important as luck is, there are more important things to consider for any successful investing strategy as a reminder: keep buying the market (like say the US economic bellwether S&P 500 index fund) through good and bad markets and keep them for a very long time (20+ years preferably).
As the AI age is fully upon us, being constantly integrated into any number of industries as we speak and impacting our lives in one way or another, I have some concerns. Here are few of those concerns:
- HR (Human Resources) and DEI (Diversity, Equality, Inclusion) staff cuts
I’ve read several articles that show many companies decreasing the number of HR positions, using AI to replace many of them. Once these HR employees are laid off, where do they go, especially if other companies are also letting go of their HR positions?
In one of those articles, some companies were already using AI to do off boarding (termination) procedures. Think about that. AI is firing people, and not people firing people. That sounded cold and harsh.
And it’s not just one or two companies that are cutting HR staff. There are many companies doing the same thing.
Another job position that has faced massive layoffs is the DEI Department, with companies citing data driven analytics rather than human led initiatives to monitor diversity metrics and employee sentiment.
An article I read points to this new reality where AI is recommending staff cuts based on whether or not a position is productive to the company’s bottom line. This may include anyone who doesn’t basically make money for the company, in one form or another…
- IT (Information Technology) and other support services staff cuts
My last job that allowed me to retire early was in the IT field, as an IT tech support staff. This field has fared not much better than the HR departments the world over.
With large companies, especially IT related companies cutting staff in IT help desk/tech support, the field I thought would last longer, is also in danger of mass layoffs due to AI. Add in any number of support staff, which include positions like administrative, clerical, customer & sales, and operations/facilities positions, and it’s clear AI is here to stay.
- Any position that can be replaced by AI
Another criteria for layoffs is if AI can replace those job functions that used to be done by humans. Think job positions like accounting, bookkeeping, computer programming, content writers, copywriters, graphic designers, translators/interpreters.
These were all considered good, well-paying jobs at one time or another, at least when I was working. Scary, but true…
Bottom line: White collar workers have been disproportionately impacted by the rise of AI.
Now, just to be fair, I have also read some positive uses of AI that actually help people. Some of these were mentioned in a Podcast featuring Kevin O’Leary, a known Canadian entrepreneur, and TV personality.
- AI being used by insurance companies to create work orders in matter of hours and not days, for roof repairs (insurance representative uses a drone to inspect the roof of a residential/commercial property, minimizing injury risk from falls or worse for the human)
- AI shortening the time it takes to issue underwriting for insuring anything like an expensive watch; what used to take days can be done by AI in seconds
- AI used in farms to correctly control what seeds need to grow (whether that’s nutrients, pesticides, or water, AI can figure that out before applying the correct one)
- AI is helping doctors determine diseases like cancer with high accuracy
- AI is discovering new drugs which may someday benefit us all
- AI is used to track endangered animals via use of drones and cameras; it can also detect poachers in real time
- Personally, I‘ve used AI to analyze several mutual funds/index funds last year and it saved me an hour or more on researching different funds, figuring out their expenses, Rate of Returns. It was so easy and quick. Definitely quicker than me…
- Set a budget!
Setting a budget is the bedrock of any good financial planning. Without knowing what you spend versus what you make, you’ll never be financially independent.
When I sold cars, I used to meet doctors with their high salaries turned down for a lease due to bad credit. They spent way more than they made. Don’t be like them.
Buy what you need and not what you want. For me, being a minimalist has helped me tremendously. I no longer feel the need to buy stuff that doesn’t benefit me. Get into minimalistic lifestyle, and you’ll notice you actually have more money left over each month!
- Once budget is set, pay yourself first
Instead of paying your bills first, you should pay yourself first. Transfer (and invest) a percentage of your income towards your retirement.
Aim for at least 10% of your paycheck towards your retirement, but don’t stop there. Always aim higher, high as you can go.
I started at 3% when I started at my last job, then eventually increased it to 10%, 17%, 20%, then finally the maximum allowed amount I can put towards my 401k account. Get into this mindset to achieve your goals.
- If you have extra money to invest, don’t forget about the Roth IRA
This is one regret that I have. I should have opened one to take advantage of its tax free benefits of a Roth IRA!
Well, learn from my mistake. Strive to open this account for yourself. See the potential of this awesome tax free account!
- Keep doing this until you are financially independent
