In an annual letter to shareholders, BlackRock (NYSE:BLK) Chairman and CEO Larry Fink shared his thoughts on how to approach growing worries surrounding the retirement crisis. Indeed, many economists have expressed concerns that elongated lifespans have increased the burden on the government, pushing the U.S. further toward unsustainable deficit spending.
In the letter, Fink claimed that the inability to retire with financial security is one of the greatest challenges of this century. According to the CEO, investing may help provide a solution to the issue. Fink also argued that the current retirement age of 65 may have outstayed its welcome.
“Today in America, the retirement message that the government and companies tell their workers is effectively: ‘You’re on your own,’” Fink noted. “And before my generation fully disappears from positions of corporate and political leadership, we have an obligation to change that.”
Reasonably so, half of Americans between 55 and 65 possess virtually “no savings in personal retirement accounts.” Under the current Social Security system, officials estimate that it will be unable to distribute full benefits within 10 years.
“America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity,” he wrote.
Fink Shares Suggestions on Solving Retirement Crisis
Fink didn’t just confirm the issue with the current retirement system. The CEO also offered some potential ideas that could help ease the burden of the current Social Security methodology.
Per The New York Times, these ideas include:
- The creation of a retirement system to “cover all workers,” including gig and part-time employees, which is an initiative that has already been undertaken by 20 states.
- Encouraging companies to provide incentives for retirement planning, including fund matching and easier transfers to 401(K) savings accounts.
- The creation of systems to make 401(K) plans offer more “pension-like predictable income streams.”
Fink also tossed around the highly controversial topic of raising the retirement age:
“No one should have to work longer than they want to. But I do think it’s a bit crazy that our anchor idea for the right retirement age — 65 years old — originates from the time of the Ottoman Empire.”
Fink also nodded to climate-centric investing, stating that the movement toward renewable energy is only a matter of time. “It’s a mega force, a major economic trend being driven by nations representing 90 percent of the world’s G.D.P.,” he said.
Still, Fink also advocated for “energy pragmatism.” That is, the acceptance of the need for energy conservation and improvement, but the realistic expectation that countries will continue to depend on hydrocarbons for many years.
“Nobody will support decarbonization if it means giving up heating their home in the winter or cooling it in the summer […] Or if the cost of doing so is prohibitive,” said the CEO.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
