BlackRock’s Larry Fink Sees Social Security Crisis

BlackRock Chairman Larry Fink said financial markets can help resolve a brewing crisis around Americans’ ability to retire as life expectancies rise, and the government can provide a basic safety net.

In his annual letter to shareholders of the investment firm that oversees $10 trillion in assets, Fink called the diminishing ability to retire in a financially sound manner one of the industry’s greatest economic challenges. of the 21st century. He said access to investment can help solve this conundrum, while questioning whether everyone’s expectation to receive Social Security benefits at age 65 has become archaic.

“Today in America, the retirement message that government and corporations send to their workers is effectively: ‘You are on your own,’” Fink wrote. “And before my generation completely disappears from leadership positions in business and politics, we have an obligation to change that.”

Fink pointed to a U.S. Census Bureau survey that found nearly half of Americans ages 55 to 65 have no savings in their personal retirement accounts. The investment firm executive noted that tens of millions of Americans work part-time or in gig jobs that don’t offer clear retirement plans.

The outlook is worsened by the fact that the Social Security system has said it will not be able to pay benefits in full by 2034.

The 71-year-old believes that the American retirement system has entered a crisis so deep that it is now a once-in-a-generation problem. He said it was up to government and business leaders to start trying to solve this problem immediately.

A federal law that will require employers with 401(k) plans to automatically enroll new workers is a positive, he said. Hundreds of companies have already taken this step, Fink noted.

But companies also have a duty to offer benefits such as matching funds or financial education to workers, he said. Fink also said employees should be able to easily transfer their 401(k) savings when they change jobs.

In the United States, approximately 20 states have implemented retirement systems that include gig and part-time workers. Fink said more states should consider creating specific programs and acting as “retirement laboratories.” Indeed, it can both benefit individuals and help ensure the long-term health of Social Security.

Longer lifespans create additional challenges when trying to improve the retirement system, Fink said. The issue is of growing importance as blockbuster weight-loss drugs have already begun to radically reshape the health care landscape, he said.

As a result, Fink said it’s worth considering when Americans should begin accessing Social Security benefits, a typically sensitive topic that no politician wants to discuss. He discussed potential solutions, including raising the age for benefits or finding ways to encourage working later.

“No one should be forced to work longer than they want to,” he said. “But I find it a bit crazy that our flagship idea for the correct retirement age, 65, comes from the days of the Ottoman Empire.”