Rethinking Retirement

In his 2024 annual letter to investors, released in late March, BlackRock Chairman and CEO Larry Fink said it is time to rethink retirement.

“The retirement system in America needs modernizing, at the very least,” Fink wrote. “America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity… 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 noted factors putting the U.S. retirement system under strain, including changing demographics (and policy not keeping up), Social Security’s well-documented challenges, and the shift from defined benefit to defined contribution retirement plans.

“Put simply, the shift from defined benefit to defined contribution has been, for most people, a shift from financial certainty to financial uncertainty,” Fink wrote, noting that even people who know how to save for retirement still don’t know how to spend for it. “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.”

In addition to introducing BlackRock’s LifePath Paycheck—allowing older workers to shift some of their 401(k) contributions into an annuity—which he called a “revolution in retirement” he believes “will one day be the most used investment strategy in defined contribution plans,” Fink also used that highly publicized letter to push for more automatic nudges to get more people enrolled and saving more in workplace retirement plans.

“As a nation, we should do everything we can to make retirement investing more automatic for workers. And there are already bright spots. Next year, a new federal law will kick in, requiring employers that set up new 401(k) plans to auto-enroll their new workers,” he wrote. “Plus, there are hundreds of major companies (including BlackRock) that have already taken this step voluntarily.”

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