BlackRock's Larry Fink calls for urgent national action on retirement crisis

By Jessica Hall

'Today in America, the retirement message that the government and companies tell their workers is effectively: "You're on your own,"' Fink says

The retirement crisis facing America is so "big and urgent" that government and corporate leaders need to stop business as usual and tackle the problem so that future generations will be able to grow older with dignity, according to the chair and chief executive of investment-management company BlackRock Inc.

In his annual letter to BlackRock (BLK) investors, Larry Fink called on government and business leaders to tackle the problem of retirement security and raised questions about the optimal age for retirement as longevity increases.

"Maybe once a decade, the U.S. faces a problem so big and urgent that government and corporate leaders stop business as usual. They step out of their silos and sit around the same table to find a solution," Fink said.

He cited the 2008 financial crisis and the way technology CEOs and federal government officials came together recently to address the "fragility" of America's semiconductor supply chain.

"We need to do something similar for the retirement crisis. America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity," Fink said.

Fink also raised questions about the optimal retirement age at a time when longevity is increasing.

"As a society, we focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years," Fink said. "It's not just that more people are retiring in America; it's also that their retirements are increasing in length," he said.

He said it was a "bit crazy" to anchor retirement to the age of 65, an idea that he said originated during "the time of the Ottoman Empire." He added: "Humanity has changed over the past 120 years. So must our conception of retirement."

There is no official retirement age in the U.S., but many consider it to be the age when workers get their full retirement benefits from the Social Security Administration. For anyone born in 1960 or later, that age is 67. Some politicians, among them Nikki Haley during her now-suspended campaign for the Republican presidential nomination, have proposed increasing that age for future beneficiaries.

Fink said that over the coming months, "BlackRock will be announcing a series of partnerships and initiatives" aimed at discussing retirement security in America.

"Today in America, the retirement message that the government and companies tell their workers is effectively: 'You're on your own.' And before my generation fully disappears from positions of corporate and political leadership, we have an obligation to change that," Fink said.

He said the United States could study changes made by other countries and draw on their successes, although he conceded that it would be a political challenge to make changes to the U.S. retirement system. He pointed to the Netherlands, where the retirement age automatically adjusts with changes in life expectancy, as well as to Japan, where the government has made it easier for older people to continue to work longer if they choose.

Meanwhile, in Australia, which Fink called a "good model for American policymakers to study and build on," employers contribute a portion of the income of every worker between the ages of 18 and 70 into a retirement account belonging to the employee, Fink said.

"People are living longer lives. They'll need more money," he said. "Capital markets can provide it - so long as governments and companies help people invest."

-Jessica Hall

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03-27-24 1321ET

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