There’s a pretty big difference between what’s true today and what’s possible tomorrow, right? Well, the world’s richest man has just tried to create a bridge between the two — and while it may sound a bit pie-in-the-sky right now, it’s impossible to discount everything about Elon Musk and his vision for the global economy.

In case you missed it, Musk made some serious waves earlier this month when he appeared on the podcast Moonshots with Peter Diamandis. Everybody knows Musk has an opinion on everything, and the two covered a lot of ground in their session. But the chat got really controversial when Musk started talking about the future of retirement. The way he sees it, pensions will soon become “irrelevant” in a world shaped by AI and robotics.

Just so we’re clear: This was not sound financial advice, and you should not ditch your 401(k) anytime soon. Retirement planning is grounded in the here and now with real costs, lifespans, and uncertainty. 

That being said, Musk’s claims are also grounded in some practical theory. And while this all sounds pretty wild now, the economic paradigm shift he's describing isn’t impossible to imagine. AI is already rewiring labor and productivity — so couldn’t it impact value creation and income to the point where retirement savings is less central to the lives of our kids or our grandkids?

This one definitely merits a couple pinches of salt, but it’s an intriguing proposition nonetheless. So, let’s take a closer look from a grounded perspective.

What Is Elon Musk Actually Saying About the Future of Retirement?

First thing’s first: Elon Musk hasn’t announced a retirement savings holiday, and he’s not advising you to stop paying into your IRA. So, what is he on about?

Musk said he believes AI and automation will usher in a world of abundant, productive output over the next 10 to 20 years. As a result of that abundance, consumer prices will drop so low that traditional savings will effectively become redundant. You won’t need a pension, because all the essentials will be provided for you at minimal cost.

That might be a leap, but let’s tackle this step-by-step.

Nobody can argue with Musk when it comes to his assertion that AI is a productivity multiplier. Companies are already deploying it to automate everything from supply-chain optimization to autonomous vehicle research. Right now, AI means incremental productivity gains and shifts in headcount.

Musk is picturing a world where autonomous systems manage manufacturing lines, AI models new drugs, and logistics scale with no labor input. In some sectors, that’s becoming closer and closer to reality — and once it’s finally achieved, the cost of producing some goods and services could indeed approach the bare minimum.

That’s the “abundance” Elon Musk is talking about. We’re not going to have instant access to everything our heart desires. But the basics will cost so little that access effectively becomes universal.

There’s one hitch, though: AI does create value, but that value won’t automatically flow to everyone. That’s where distribution becomes essential.

In addition to dissipating scarcity, Musk also told Diamandis that he sees a future where everybody has a universal income that guarantees a high standard of living in this age of abundance.

Again, this isn’t as crazy as it might sound.

We know that a universal basic income is possible, and variants have been tried and tested all over the world for decades. Alaska’s Permanent Fund Dividend, Iran’s nationwide cash transfers, and pilot programs in different western cities have shown it works — but only if there’s the political will, policy, and surplus to support it.

AI totally shifts the goalposts. With a significant rise in productive surplus thanks to AI and robotics, income support systems could transcend means-tested welfare payments and turn into dividends of collective productivity. That doesn’t mean you have to stop saving. But it does change why you’re saving and make it seem way less important.

Will AI Really Change Retirement Economics?

This is all really interesting stuff, and it’s still pretty theoretical. Your healthcare costs are going to keep rising, inflation still bites, and housing isn’t free. So, retirement savings still matter, and Elon Musk’s economic vision is no substitute for financial planning.

These ideas raise some fundamental points about AI and how it will affect your retirement. But right now, all the disruption AI has caused has made your retirement savings more important than ever.

AI will transform labor. Some sectors are already seeing displacement, and others will see a lot of augmentation over the next couple of decades. That means loads of us will need to adapt our skills and diversify our income streams, and it’s something you can start doing now.

It’s also important to bear in mind that transformation takes time. You’ve got to cushion against uncertainty, economic downturns, and everything in between. That means saving is more essential now than ever — regardless of the productivity gains a lot of companies are going to enjoy in the years to come.

The concept of traditional retirement may well evolve along with AI, becoming less central. For example, enhanced productivity could lead to phases of work and leisure, so that income becomes decoupled from employment. But we’re talking ‌decades from now — not financial quarters.

Long story, short: Elon Musk’s podcast musings aren’t a total rejection of financial planning. They’re a shift in our current economic paradigm — and if AI lives up to its ambition, we very well may end up in a world where machines do the heavy lifting. 

But until that vision is realized, you shouldn’t stop planning for the future.