Billionaire Elon Musk recently told people not to worry about “throwing away” money for retirement because advances in artificial intelligence would make savings irrelevant in the next ten to twenty years.
Let me translate that into simple financial English: Don’t prepare for your future because robots and automation will take care of it.
That might sound exciting on a podcast. Even my own ‘Red, White and Green’ podcast. It may even sound comforting to those who don’t have a 401(k) plan.
But for ordinary Americans trying to plan their financial lives, it’s foolhardy advice.
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Elon Musk says he doesn’t have to worry about saving for retirement. He has billions of dollars and can take that risk. (Getty Images)
This is why.
First, Musk is a visionary entrepreneur. He is also worth hundreds of billions of dollars. Somewhere between $600 billion and $750 billion, depending on the day. Those two facts are important. When you already have generational wealth, it’s easy to talk about a future where money doesn’t matter. Most families do not have that luxury, while many merely keep the promise of social security in the future, which is unknown.
Your pension is not a scientific experiment. They are messages. It’s housing. It’s healthcare. It’s dignity.
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Those bills don’t wait for AI. Those bills cannot be collected by Tesla.
Musk’s argument rests on a futuristic idea that artificial intelligence and robotics will create so much productivity that scarcity will disappear. In this world, goods become cheap, income becomes universal and money loses importance.
That’s an interesting theory. However, since the beginning of time, money and power have always mattered.
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And it is certainly not a financial plan.
It assumes that three huge things are all happening perfectly: technological progress is on schedule (that would be a first), wealth is widely distributed, and government systems adapt smoothly. History shows us that technological revolutions do not distribute benefits evenly, and tend to concentrate wealth first and solve inequality later, if they ever do so. Just ask Musk.
A nurse checks the health of a patient’s heart during a routine exam. Healthcare is still a major expense for Americans. (iStock)
Ask factory workers displaced by automation. Replace store employees with self-checkout. Ask taxi drivers who compete with ride-sharing apps.
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Technology does not automatically equal financial security.
Meanwhile, in reality, Americans here are facing rising healthcare costs, expensive housing, persistent inflation and record household debt. Social security already faces long-term financing problems. Pensions are disappearing. Many employees do not even have access to employer pension plans.
That is the environment into which people are now retreating. It’s not a utopia.
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Musk’s argument rests on a futuristic idea that artificial intelligence and robotics will create so much productivity that scarcity will disappear.
And here’s the most dangerous part of Musk’s message as a person who has been giving financial advice for almost 35 years: it encourages people to delay action.
If someone in their 30s or 40s hears this and decides to stop contributing to their 401(k), skip their Roth IRA, or pay off their mortgage, the time lost increases forever. You lose that snowball effect. Compound interest works best if you start early, not if you hope Silicon Valley can bail you out.
Hope is not a strategy.
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Let’s do some simple math. A 40-year-old who stops saving for a decade while waiting for an AI miracle could easily miss out on hundreds of thousands of dollars in future retirement income. That’s not theoretical. That’s real money, driven by real market returns.
Even if AI dramatically reshapes the economy, and it probably will, money will always buy something incredibly valuable called optionality. The ability to have choices.
Savings give you flexibility. They give you independence. They give you negotiating power over how you live, where you live and when you stop working. They protect you from medical surprises, job disruptions, market downturns and policy changes.
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A future with advanced technology does not eliminate risks. It changes its shape.
And let’s be honest about something else. Even in Musk’s dream world, someone is still controlling the machines. Someone still owns the platforms. Someone is still collecting the winnings. Betting that these profits will automatically flow to everyone equally is optimistic at best.
And here’s the most dangerous part of Musk’s message as a person who has been giving financial advice for almost 35 years: it encourages people to delay action.
So should people who retire take Musk seriously?
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As a dream experiment? Certainly.
As daily financial guidance? No chance.
Here’s my takeaway from all this.
Continue funding your retirement accounts. Take the free employer match. Build up your emergency reserve. Invest consistently on a monthly basis. Reduce high-interest debt. Diversify your assets and review your plan annually.
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If AI creates abundance one day, great. You enter that future with real possessions and not with real fear.
But if it doesn’t arrive on time or doesn’t benefit everyone equally, you’ll be very glad you didn’t outsource your retirement to an Elon prediction.
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You can’t retire on optimism.
You can retire in preparation.
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