Modric's position is already under threat. But that is a normal thing. Considering that he is no longer young. Currently Modric has one more year on his contract until 30 June 2024. And I doubt that next year Real Madrid will again extend his contract at the club. But I still remember that in the transfer market yesterday Modric rejected an offer from an Arab club. And he still chooses to play at Real Madrid with his contract extension only until next year. And in a report it was reported that Modric wanted to retire at Real Madrid.
With five Champions League, some La Liga, some great tournaments with Croatia, Modric no longer has to prove anything. He only continues playing because he want to prolong his career and enjoy football when he can play.
With all achievements he got, he can retire easily or move to Saudi Professional League and enjoy money. I don't think Modric sees his position in Real Madrid is under threat as he knows that he is old and he decided to stay in Bernabeu because he loves that club and want to win more titles with them. I feel he has no personal issue to play as a substitution in Real Madrid.
So is it possible that if his contract is not extended next season then he will retire? But my guess is that he will be approached again by an Arab club and if it is a high offer then maybe he will follow C.Ronaldo to an Arab club. But if Real Madrid extends his contract again then of course Modric will definitely continue to stay at Real Madrid. But I'm not sure that will happen.
Perhaps he will actually retire in Real Madrid but it's his freedom to move to Saudi Professional League for money after all. No one can prohibit Modric to do that in a next summer transfer market. Will he be ready to leave Europe after Euro 2024 as I see his only regret is no title with Croatia.