Well, we are talking about decades of transformation. The Singularity will probably not arrive before 2040-2050, or even later.

Still, AI does not have to be that "smart" to gradually replace next to all human labor before that point. As of now a humans can perform around 20.000 known tasks and AI is rapidly catching up in every field to replace human labor.

That is human labor in the sense of "working for a living". Yet, just because a human does not work, the output in goods and services remains the same and is still increasing.

The loaf of bread that is produced with 2% of the population toiling in agriculture is even better now than those produced with 80 % of the population once toiling in the fields.

The point of automation is to get rid of the very concept of "working for a living". Still , humans will have plenty of passions they can persue. It will be possible to merge into the digital world at some point for sure.