At the age of 38, of course Luka Modrić is no longer able to compete in playing in the top European leagues, so it is only fitting that Luka Modrić spends the rest of his career playing in the Saudi Arabian league to collect more money and also there the league is not competitive making him Luka Modrić can still compete in showing his performance, which is different if he stays at Real Madrid.
Real Madrid only needs Luka Modrić to be able to guide young players so that there is regeneration in the Real Madrid team and he has been doing this for the last few seasons until now it is time for Luka Modrić to leave, either retiring or continuing his career in a non-competitive league. I think it's the same, those are two good options.
In fact, his abilities are still very good, it's just that this isn't accompanied by his speed, which easily fades due to age. However, his future is still a question because until now there has been no confirmation about his future with Real Madrid. It was rumored that Ancelotti had offered him to become part of Real Madrid's coaching staff, but it was not yet clear whether this was valid news or an exaggerated rumor. However, it looks like he has good potential to start his career in the coaching staff.
Modric has been part of Real Madrid for a very long time, and he has also helped Real Madrid a lot in regenerating because the experience he has is very large and he can pass that on to the young players in the squad. Their transition is also going very well, where they are starting to slowly shift the roles of senior players to younger players and we can see how the results are now. In my opinion, Real Madrid is one of the clubs that has a successful regeneration program because they have not faced any significant obstacles.