Elon Musk Says AI Will Make it Unnecessary to Save For Retirement. I'm Skeptical by Scott Stolz, CFP, RICP (week 34)

 

In a recent interview on the Moonshots with Peter Diamandis podcast (Elon Musk on AGI Timeline, US vs China, Job Markets, Clean Energy & Humanoid Robots | 220), Elon Musk said “Don’t worry about squirreling money away for retirement in like 10 or 20 years, it won’t matter…You won’t need to save for retirement.  If any of the things we’ve said are true, saving for retirement will be irrelevant.”  Now that’s a bold prediction.  And whatever your thoughts about Musk are, there’s no denying that he is extremely intelligent and one of the best visionaries in the last 100 years.  Therefore, his opinions, no matter how crazy they may seem, need to at least be considered.

The image depicts a human hand extending towards a robotic arm, surrounded by a digital, glowing, futuristic cityscape with abstract, neon-like circuit patterns. AI-generated content may be incorrect.

The basic premise of his bold prediction is that the by the end of the year, the intelligence of AI will surpass human intelligence.  More importantly, AI will be able to improve itself at such a rapid pace that AI and robotics will start to create massive abundance.  When this starts to occur, most, if not all things we need to exist each day will become incredibly cheap – maybe even free.  Therefore, anything you have saved for retirement won’t have a use.

There is no question that AI is going to disrupt the labor market in profound ways.  In fact, it already is.  Many white-collar jobs that require human thought and analysis are being replaced by AI every day.  As I wrote about a few weeks ago, most of our phone calls to customer service centers are now “handled” by AI chatbots.  We can complain about how well they are handled, but the jobs are not coming back.  And the quality of the chatbots will improve.  Relatively highly paid jobs like computer programming, legal and financial analysis and marketing are also being eliminated.  No telling what types of jobs will no longer be necessary if robots become cheap to produce (by AI or other robots) and can do most daily tasks. 

But does this mean no one will need to work and money will become obsolete?  That seems unlikely to me.  I’m quite sure my bank is going to continue to insist I pay my mortgage.  And I’m not going to see my insurance bills and property tax bills eliminated.  And does anyone think we will be able to go to the emergency room and not get an outrageous bill?

I’ve entitled this blog RetirementMoats because planning for retirement is about having strategies in place to protect you from the financial risks that threaten a financially secure retirement.  How AI impacts the economy is just another risk.  Musk might be right and everything I need to live might eventually be made available to me at no cost.  If so, I’m going to have a bunch of money that has no real use.  Is that so bad?  But what if I follow his advice and go out and spend my entire retirement savings while it can still be used to buy things and he turns out to be wrong?  Where does that leave me?  Or what if my kids stop saving for retirement based on his advice?  I’m quite sure Musk is not going to use any of his $800 billion to bail me or anyone else out.  So, for now, I’m not changing any of my retirement plan strategies, and I would suggest you do the same.

I’m going to end with a final thought.  If Musk is right, then there will be almost no jobs at all.  AI and robots will do virtually everything.  We will all be permanently “retired” no matter what our age.  We’ll all be free to live a life of leisure where everything we need to survive is made available to us.  Is that a good thing?  Hard for me to see how it is.  What purpose would we all have?  And what is life without a purpose?  And what if AI determines we have no purpose?  Sounds like a great Hollywood movie.  Oh wait, I think they already made that one years ago.

I’d love to have everyone’s thoughts on this one.  Please add your comments to the comment section. 

 

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