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\t\t\tIllustration by Tag Hartman-Simkins \/ Futurism. Source: Getty Images<\/p>\n
Here\u2019s a new one. Not only is AI about to take your job and leave you on the street \u2014 it\u2019s about to destroy your retirement account as well.<\/p>\n
As the Washington Post observed<\/a> in new reporting on the AI bubble, speculative investment into AI development is now the dominant force driving the US economy. By the numbers, the US GDP has grown at a rate of 1.6 percent so far this year, on pace to hit the 2.8 percent growth it achieved in 2024. That\u2019s all well and good on paper, except for the troubling fact that two-thirds of that growth came from AI, per WaPo\u2018s analysis.<\/p>\n That\u2019s a major red flag, as computer and software investments currently represent about 6 percent of the total US economy. 70 percent of the US\u2019 nearly $28 trillion GDP, meanwhile, is made up of consumer spending<\/a> \u2014 a category that\u2019s now been eclipsed by the AI boom. In other words, the roles are now reversed, with a very small chunk of the economy dragging the rest of us along<\/a>.<\/p>\n Callie Cox, a market strategist, told WaPo that the situation is \u201cunusual,\u201d to say the least: \u201cWhat drives the economy quarter by quarter is almost always consumer spending.\u201d<\/p>\n This being the case, the inevitable question becomes: what happens if AI spending stops or slows down?<\/p>\n The short answer: the largest tech firms could likely weather the storm, while AI startups and private companies reliant on venture capital to the pay the bills would crumble into dust. Energy and construction markets would likewise suffer, as new data center development grinds to a halt. The effect on Wall Street \u2014 which could see the S&P 500 lose as much as 30 percent of its expected revenue growth, WaPo notes \u2014 would be devastating.<\/p>\n And if the AI bubble does burst, one of the lesser-remarked dangers would be its effect on retirement funds. As WaPo points out, public markets are now dominated by tech companies, which means any fluctuation in their bottom line could have a \u201cpowerful influence\u201d on 401(k) accounts \u2014 not to mention other retirement savings vehicles like IRAs, or the rest of the economy.<\/p>\n \u201cWe\u2019re now locked into a particular version of the market and the future where all roads lead to big tech,\u201d Amba Kak, the co-executive director of the AI Now Institute, a tech policy think tank, told Inc. Magazine.<\/a><\/p>\n Way back in April, personal finance outlet Investopedia warned<\/a> its readers that \u201cfew would escape the pain\u201d of an eventual AI crash, given the concentration of tech stocks among the S&P 500. So far in 2025, the magnificent seven \u2014 the tech companies Meta, Apple, Google, Amazon, Tesla, Microsoft, and Nvidia \u2014 account for about 36 percent of the index\u2019s total market cap, a major concentration of wealth, in other words.<\/p>\n As strategic advisor Dion Hinchcliffe recently put it to Forbes<\/a>: \u201cthe danger isn\u2019t just the Mag 7 falling, it\u2019s that the rest of the index is simply too weak to pick up the slack when they do.\u201d<\/p>\n