BlackRock Chair says it’s ‘time to rethink retirement’

Larry Fink. Image via BlackRock.

BlackRock Chair Larry Fink says investing in capital markets is “crucial” to retire financially secure, and that’s not changing anytime soon.

In his annual Chairman’s Letter, “Time to Rethink Retirement,” Fink recalls how his father encouraged him to invest early and often. Though his parents are now deceased, Fink said that due to their long-term investment strategy they “could have lived beyond 100 and comfortably afforded it.”

The world has changed quite a bit since the 1960s, when Fink’s father encouraged him to buy his first stock, but there are some constants. A big one: Over the long haul, money grows faster in capital markets than it does in the bank.

“My parents lived their final years with dignity and financial freedom. Most people don’t have that chance. But they can. The same kinds of markets that helped my parents in their time can help others in our time. Indeed, I think the growth- and prosperity-generating power of the capital markets will remain a dominant economic trend through the rest of the 21st Century,” Fink wrote.

Fink goes further, even, saying that the role of capital markets will likely grow: “They’ll have to if the world wants to address the challenges around infrastructure, debt, and retirement. These are the major economic issues of the mid-21st Century. We’re going to need the power of capitalism to solve them.”

For each of those challenges, there are myriad investments that could pay dividends for people who invest young and give their money time to grow. While Fink doesn’t claim foreknowledge, it’s logical to believe energy and energy security, both of which are integral for prosperity, are likely to be smart picks for long-term investment.

He stressed that energy investments aren’t as black and white — or fossil fuel vs. renewable — as many claim.

“The energy market isn’t divided the way some people think, with a hard split between oil and gas producers on one side and new clean power and climate tech firms on the other. Many companies, like Occidental, do both, which is a major reason BlackRock has never supported divesting from traditional energy firms,” he wrote.

Cutting through the noise, some of it political, is becoming increasingly important given the difficulty many people will face in having the same “dignity and financial freedom“ during their golden years that Fink’s parents did — based on demographic trends alone, long-term investment is more important now than it was during their heyday.

“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,” he wrote, adding, “People are living longer lives. They’ll need more money. Capital markets can provide it — so long as governments and companies help people invest.”

There’s seemingly an inverse correlation between the people who need to have a real conversation on retirement and those who are amenable to doing so, but Fink says a plan needs to be made — and the sooner the better.

“America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity,” he wrote.