Why BlackRock’s C.E.O. Wants to Rethink Retirement

Larry Fink of BlackRock thinks the world needs to better prepare workers for retirement.Credit…Winnie Au for The New York Times

BlackRock’s chief wants to rethink a fiscal time bomb

As the chairman and C.E.O. of the asset management giant BlackRock, Larry Fink commands attention from companies and governments, helping spearhead movements like socially driven business and the need for companies to fight climate change.

In his latest letter to investors, published on Tuesday, Fink weighs in on a new topic: a looming global retirement crisis, and what can be done to address it.

The way retirement is handled around the world needs to change, Fink writes. Many countries will hit an aging tipping point within the next 20 years, according to his letter, but most people aren’t saving enough for when they stop working.

In the U.S. in particular, people are living longer, a trend that’s likely to grow given the advent of weight loss drugs like Wegovy, Fink writes. But he adds that four in 10 Americans don’t have $400 in emergency savings, let alone proper retirement funds.

“America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity,” he writes, much as tech C.E.O.s and Washington banded together to shore up U.S. semiconductor manufacturing. Fink adds that he has a good vantage point for the problem, given that over half of BlackRock’s $10 trillion in assets are for retirement.

Fink said he wanted to kick off some hard conversations, andoffered some initial suggestions:

• Setting up retirement systems to cover all workers, even gig and part-time laborers, as 20 states have done;

• Encouraging more employers to offer incentives like matching funds and making it easier to transfer 401(k) savings;

• Creating systems that allow for 401(k)-like plans that provide pension-like predictable income streams, to reverse what Fink called a historical shift “from financial certainty to financial uncertainty.”

Fink also raises a politically fraught idea: raising the retirement age. The Social Security Administration has said that by 2034, it won’t be able to pay out full benefits, he notes:

Fink also defended climate-minded investing. His firm has become a target for conservatives for embracing the approach known as E.S.G. But the BlackRock chief said that the transition to green energy was inevitable. “It’s a mega force, a major economic trend being driven by nations representing 90 percent of the world’s G.D.P.,” he writes. (That said, he said he had stopped using the term “E.S.G.” because of its political toxicity.)