BlackRock Chair Larry Fink discussed the looming retirement crisis in his annual shareholder letter, stating that retirement at 65 is a crazy concept since Americans live longer.
Fink on retirement age
The CEO of the world’s largest asset manager, with $10 trillion in assets under management, shared that people shouldn’t be forced to work longer than they wanted to, but retiring at 65 seems a bit “crazy” to him. He noted that retiring at 65 dates back to the Ottoman Empire times while reflecting on the current situation.
People live longer, and it takes a toll on the retirement system
Fink praised new drugs that help fight obesity and diabetes and added that the fact that people can live longer is terrific. However, this longevity strains the retirement system and can negatively impact the future of Social Security.
No one thinks about retirement
The famous CEO also noted that despite significant efforts to expand life expectancy, no effort was made to ensure people lived comfortably during those years. Fink also shared a message that older generations need to help younger ones invest in a better future.
Things were different in the 50s
Fink, born in 1952, wrote that in the 50’s, almost half of people could not reach the retirement age. Despite paying into Social Security, many died before turning 65 and, therefore, couldn’t claim benefits. However, life expectancy has improved, and by 2030, every baby boomer will be 65 or older. This means one in every five Americans will be of retirement age.
Fink on his modest upbringing
While writing about retirement, he mentioned that his mother, a teacher, and father, a shoe store owner, could save enough to live comfortably until they turned 100. However, they did not get to enjoy it because they passed away much sooner.
The outlook for Social Security
The CEO of BlackRock also reminded investors that by 2034, Social Security will not be able to pay full benefits, as discussed in the 2022 Social Security Trustees report. The report said that people will receive 77% of their total benefits starting then. Fink also stated that more states should look into creating detailed programs and act as “laboratories of retirement.”
No savings
Fink further cited a 2022 Census Bureau survey showing that almost half of Americans aged 55 to 65 reported no savings in personal retirement accounts. He encouraged people to stay in the workforce longer and called for the government and businesses to unite and try to solve the looming retirement crisis.
Boomers should fix the crisis
Fink said that younger generations lost faith in older ones, which is justifiable. He cited a University of Michigan survey that revealed that over half of young Americans question the purpose of life. As the Wall Street Journal reminded, this is the worst result since 1976. Fink called this extremely concerning and said it was his generation’s duty to fix the problems.
Netherlands, Japan, Australia
The billionaire, who has been working on Wall Street for five decades, also stated that the Netherlands started raising the retirement age to correspond with rising life expectancy a decade ago. He added that Japan has addressed these concerns for over two decades and praised Australia’s superannuation system as a good model.
Ageism at work
While Fink made some good points, he did not address the age discrimination affecting all workers over 50. Research confirmed that the majority of workers face discrimination, and many do not get promoted over their age. Additionally, due to illnesses or sudden death, the actual average age for retiring in the US is 62.
Country of broken dreams
Most baby boomer lawmakers cannot agree on a solution to the looming Social Security crisis, and Fink wrote that it is up to them to help younger generations find hope for the future. He concluded that the whole country could become a place where people’s dreams end up bottled up in their bedrooms.
Working on a solution
While Fink did not explicitly tell people they must work after 65, he clearly said they should be given valid options to stay in the workforce until they want or can. If it is not about raising the retirement age, what would the solution for the looming crisis be?
