Oh, Elon, It’s Easy for You to Say ‘Money Won’t Matter in 2036.’ What About the Rest of Us?

When the richest man in the world predicts that money will not matter in 10 years, it makes the rest of us sit up. Is this more out-of-touch trillionaire-speak, or has Elon Musk seen the economic future?

What Musk actually meant

Musk’s point was not that dollars will disappear. He believes AI and robots will eventually produce goods and services in such abundance that people will need far less money to live well.

“What do you want money for?” Musk asked during an interview with The Economist. If machines can supply almost everything people want, he argued, money loses much of its purpose.

Deflation is central to that prediction. As robots make production cheaper and AI reduces the cost of services, the same dollar could buy much more.

There is some logic to it. Technology has already made computing, communication and entertainment dramatically cheaper. AI could do the same for education, transportation, financial guidance and parts of health care.

But abundance has limits. Robots cannot create more beachfront land or homes in sought-after neighborhoods. AI may help diagnose illness, but it cannot instantly produce unlimited nurses, caregivers, hospital beds or one-on-one medical care.

If you have over $100,000 in savings, imagine how much more that could buy in Musk’s future. It may be worth getting advice from a pro. SmartAsset offers a free service that matches you to a vetted, fiduciary advisor in less than five minutes.

What other experts say

MIT economist Daron Acemoglu responded with a pointed challenge: If money will not matter in 2036, Musk should pledge to give away his fortune by then.

Venture capitalist Vinod Khosla was more receptive, but added an important qualification. Money might matter less only if the benefits of AI-created abundance are shared widely. Otherwise, the owners of the robots and AI systems could become richer while displaced workers struggle.

That is the central problem with Musk’s forecast. Technology can create enormous wealth without deciding who receives it.

The Organisation for Economic Co-operation and Development (OECD) also expects AI to raise productivity, but warns that concentrated ownership and uneven access could widen economic divisions.

Cheaper goods would be good news if incomes held steady. The risk is that AI could lower prices by replacing workers as well as reducing production costs. If paychecks disappear faster than prices fall, many households could still end up worse off.

What ordinary Americans could and should do

For Americans approaching or already in retirement, can we stop paying into our retirement accounts? Spend with wild abandon? Assume robots will make housing, groceries and health care almost free?

Probably not the best ideas.

Stopping retirement contributions would mean giving up a dependable benefit today for speculation around what happens in the next 10 years. That is especially hard to justify when an employer offers a 401(k) match.

Saving also works as a hedge if Musk is right. If AI drives down prices, the money in your retirement accounts could buy more. If AI boosts corporate profits, a diversified portfolio may benefit from that growth.

Debt deserves attention too. Deflation favors savers but makes fixed debts heavier relative to income. Paying down high-interest balances before retirement could help whether the next decade brings inflation, deflation or something in between. If you have a $15,000+ debt problem, the sooner you deal with it, the better. National Debt Relief is one of the most respected providers of debt relief in the U.S.

Americans should also keep planning for costs that may resist automation, including housing, home insurance, long-term care and hands-on medical treatment. A realistic retirement budget should not assume those bills will disappear.

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Money may matter less, but it will still matter

Musk may be right that AI and robots will make many things cheaper. He could also be wrong about the timeline, who benefits or how much scarcity remains.

That leaves savers with a fairly easy decision. If Musk is right, today’s savings may buy more than expected. If he is wrong, we will still need them.

The old adage “prepare for the worst but hope for the best” has never been more appropriate. Should Musk make your retirement account unnecessary, being overprepared will be a welcome “problem.”
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