CEO of Tesla and SpaceX, Elon Musk said that in the future, people might no longer need to save for retirement because “Universal High Income” could be supplied through artificial intelligence in 10 to 20 years.
The plan has far-reaching implications. Musk says he plans for AI robots to do most of the economic production activities, leaving humans without jobs but still earning money. In this respect, it seems as though the idea of earning money or getting pensions will be rendered irrelevant.
But does this futuristic view justify abandoning financial planning on a long-term basis?
There is little doubt that AI will change the world's economy. Already, automation is restructuring industries, creating productivity, and changing the nature of work. Musk's argument presumes this productivity will translate into an across-the-board dissemination of incomes and financial security for all.
Yet even Musk has recognized that such a transition would likely be "bumpy." Transitions of this nature rarely happen in straight lines. Displacement of jobs, inequality, policy delays, and unevenness in the adoption rate across geographies-all these are also very valid possibilities.
Until Universal High Income becomes a reality that is assured, each man is in charge of his financial security.
It is important to consider the context. Elon Musk speaks from a position of extraordinary wealth and financial security. For most people, particularly salaried professionals and middle-income households, income growth often struggles to keep pace with inflation, housing costs, healthcare expenses, and education fees.
Retirement savings, for many, are less about surplus money and more about maintaining dignity and independence in later years.
In the Indian context, the situation is even more concerning. This is because it has no robust social security system that can support its seniors in the best possible way. This is despite it having options like EPF, NPS, and retirement pensions that are insufficient on their own to meet increasing expenses.
A solely AI-driven future income source, without any personal savings, can subject people to substantial financial risk in case policy developments or promises of technology do not live up to expectations.
Instead of seeing savings for retirement as old-fashioned and limiting, more and more financial planners are beginning to refer to these funds as a “Freedom Fund,” giving the account holder the ability to address emergencies, change their career paths, and retire on their own terms.
If such income streams from AI prove successful, these costs will add to financial ease. In case they fail, they would act as a safety net.
Elon Musk’s vision paints a very promising picture, but it is a good idea to make investment choices keeping current realities in mind. SIPs, Pension Funds, as well as a Diversified Portfolio, can still be a very sound investment plan.
Technological optimism and financial responsibility are not necessarily conflicting concepts. Until artificial intelligence is capable of automatically paying one’s bills, funding their healthcare, and providing for their lifetime security, retirement preparation is more than relevant, it is key.
The question isn’t whether AI will or won’t change the world, but whether people want to bet their own future on these timelines that lack certainty.
