Larry Fink Knows Less About Retirement Than You’d Think an Investment Billionaire Would

Just because you’re very good at one thing doesn’t mean you’re very good at everything

We’ve all heard actors lecture us about climate change or pesticides or whatever. Most of us understand not to take scientific advice from someone who probably hasn’t taken a science class since high school.

It’s harder to remember that advice when it’s the billionaire head of a major investment firm telling you that America’s retirement system isn’t working. But the principal still holds.

Here I’m thinking Blackrock CEO Larry Fink’s comments regarding the state of Americans’ retirement savings. Fink made headlines in 2024 with a letter to his investors titled “Time to rethink retirement,” making points he’s subsequently expanded in interviews.

Just to dispel any misconceptions, I have zero doubt that Larry Fink knows a lot more about investing than I do. None of this is to say Fink isn’t a very smart guy. Precisely the opposite: the point is that even very smart people can be misled.

Because when I read Fink’s comments, I don’t hear the insights of an investment guru, though that he may be. I hear the opinions of someone who reads the newspaper, the same as you or me. And much of what you read about retirement in the newspaper or online or even in so-called studies just isn’t correct.

Here I’ll highlight some of Fink’s statements from his investors letter and from a subsequent interview with Bloomberg, written up here – not to talk him down so much as to talk him off of a ledge. And to show how much of what we think is true about retirement turns out not to be.

“Fink clarified that millions of Americans aren’t financially prepared for their later years. ‘We have still 57 million Americans who don't have any savings or any retirement plan,’ he stated.”

Not quite. Fink appears to be referencing an AARP study that concluded that about 57 million Americans lack access to a retirement plan at work, such as a pension or 401(k). But that isn’t the same as not having any retirement savings.

The Federal Reserve’s Survey of Household Economics and Decisionmaking acknowledges that many Americans save for retirement outside of an employer-sponsor plan. Some have Individual Retirement Accounts, which are self-started retirement plans. Others save for retirement in an ordinary investment account. Still others own real estate, a small business or a farm that will provide income in retirement. The Fed data show that 84 percent of non-retirees and 92 percent of retirees have retirement savings over and above Social Security. The Fed doesn’t give a number, but if we assume that roughly 10 percent of adults don’t have retirement savings and there are about 200 million adult Americans, that’s about 20 million people without savings, not 57 million.

Sure, even 20 million Americans without retirement savings sounds like a lot. But most of these non-savers are either going to be young adults, who textbook economic theory says should probably wait until their incomes rise before starting to save, or very low-income Americans for whom Social Security will replace most of their pre-retirement earnings. If we look further into the Fed data, two-thirds of non-savers have household incomes below $50,000. These aren’t rich people who are foolishly failing to save. They’re on average pretty poor. For this group, the appropriate level of retirement savings may be zero.

The short story is that this factoid isn’t correct, and even the correct number doesn’t tell us very much.

“And if those people think Social Security alone will carry them through, Fink had a blunt reality check: ‘If that’s all you have when you retire, you’re going to be living in poverty, below the poverty line.’”

This reflects a common perception that Social Security benefits are stingy. Not necessarily the case. The poverty threshold for two individuals over the age of 65 in 2023 was $18,430. So imagine that you’re a middle-income two-earner couple retiring in 2023, who each received the median benefit paid out to new retirees in that year. What would your total Social Security benefit be? According to Social Security Administration statistics, you would receive about $44,400 in Social Security benefits per year, giving you an income over twice the poverty threshold before you touch a penny of your own savings. Even if only one member of the couple worked, they still would receive around $33,300, about 1.8 times the poverty line.

Or let’s say that you both worked, but instead of receiving the median Social Security benefit you each received the benefit paid at the 25^th percentile. Your total benefit would still be 1.5 times poverty. Ok, but now let’s say that only one of you worked while the other received that 25^th percentile benefit. Then you’re at a total Social Security benefit of $20,700, about 12 percent above the federal poverty threshold.

Now, maybe you think the federal poverty threshold is too low. Okay.

But the poverty threshold is an official number we can check, as are the amounts paid out in Social Security benefits. Once you do check them, Fink’s statements don’t reflect the actual benefits that Americans are receiving.

And they’ll reflect those benefits even less so in the future because, under current law, Social Security benefits are scheduled to increase faster than inflation in coming years. Could benefits be cut? Sure. But will they be cut for Americans at risk of poverty? Very, very doubtful.

“According to Fink, the crux of the issue is that the entire retirement system is outdated. ‘Most Americans retired between 60 and 62 then, but most Americans passed away at 67,’ he explained. ‘Today, statistically, a couple 60 years old in good health – one of them is going to live over 90.’ With people living decades longer, retirement savings must stretch further, yet most aren't prepared.”

This is mixing apples and oranges. It’s not clear what year Fink is referring to when he says “back then,” but it doesn’t really matter. There was never a time in recent history when a person who retired at 60 or 62 could expect to live only to age 67. When Fink references people passing away at age 67, he’s talking about life expectancy at birth. And, in those days, a lot of things could happen to you between birth and retirement – infant mortality in particular.

But once a person survives to retire at age 60 or 62, their life expectancy is far beyond age 67. For instance, in 1940 – the first year in which Social Security paid retirement benefits – a 65-year-old man could expect to live an additional 13 years and a 65-year-old woman an additional 15 years, according to the Social Security Administration. Sure, life expectancy as of age 65 has increased – to 19 and 22 years for men and women in 2025, respectively – but the scale of increase is nothing like what Fink believes.

Moreover, we also save dramatically more for retirement today than we did in the past. In 1947, the earliest year for which the Federal Reserve reports data, U.S. households had total retirement savings equal to about 60 percent of total annual wages and salaries. Today, total retirement savings are upward of 300 percent of wages and salaries, five times higher. That covers a lot of extra lifespan.

“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.”

At one time, this was a reasonable point to make. And that time was probably in the 1970s, when traditional defined benefit pensions were at their peak. The problem, however, was that peak participation in traditional pensions was 39 percent of the private sector workforce. Moreover, as a 1972 NBC News investigation revealed, 9-in-10 employees who nominally participated in a traditional pension never received a penny from it, thanks to strict vesting rules and the occasional corporate bankruptcy. All of those people really were on their own. They had to find a bank or investment firm to build up retirement savings, without any help from anyone.

The introduction of 401(k)s was the end – gradually, I grant – of the “you’re own your own” era of retirement planning. The first element of not being on your own is your employer offering you a retirement plan on the job, which is the most reliable way to get people saving. And 401(k)s, because of their lower cost and administrative burden on employers, have been far more popular than traditional pensions ever were. According to the Bureau of Labor Statistics, 72 percent of private sector employees in 2024 had access to a retirement plan at work, far more than ever were offered a traditional pension.

And the 401(k) has improved over the years as well. Initially, administrative costs were high. But they’ve dropped considerably as plan administrators have offered more low-cost investment options. Likewise, there were concerns that 401(k) participants would not manage their portfolio allocations as they aged. Today, most employees use target date funds that automatically shift from stocks to bonds as they approach retirement. Similarly, behavioral economists pointed out the merits of automatic enrollment, which many employers have embraced.

Big picture, 401(k)s have become “pensionized,” with the plan sponsor doing more and asking less of employees. But this has happened without some of the downsides of pensions, such as strict vesting requirements and stiff benefit penalties for workers who shifted jobs.

“When the U.S. Census Bureau released its regular Survey of Consumer Finances in 2022, nearly half of Americans aged 55 to 65 reported not having a single dollar saved in personal retirement accounts. Nothing in a pension. Zero in an IRA or 401(k).”

To start, the “nearly half” claim is incorrect. What Fink is citing is the percentage of 55- to 65-year-olds who didn’t have a retirement account, such as a 401(k) or IRA. But that’s different than having nothing in a traditional pension. When you include pensions, which cover nearly every federal, state and local government employee in the U.S., the share without a retirement plan drops from Fink’s nearly half to 31 percent. And this figure does not include individuals, such as farmers or small business owners, who save outside of an employer-sponsored retirement plan.

Moreover, as also mentioned above, these “non-savers” are on average quite poor. In the Survey of Consumer Finances, the median household income of Americans aged 55-65 who lack a formal retirement plan is just $28,000, far below the $108,000 median for households that do have a retirement plan. These are the people that Social Security was created for, and Social Security will replace nearly all of their pre-retirement earnings.

Fink does say some things I really like, such as his support for an Australian-style retirement system in which every employee has a retirement plan and the government serves more as a backstop against poverty in old age. Reforming Social Security along Australian lines could eliminate poverty in old age while cutting costs significantly over the long term. You can read my take on that model here.

But we need to set a realistic baseline of where retirement savings adequacy currently stands.

More Americans are participating in retirement plans than in the past, Americans and their employers are contributing more to retirement plans, and we’re working longer and delaying claiming Social Security. In short, pretty much everything experts say Americans should be doing, we already are doing.

Which helps explain why Congressional Budget Office data show the average over-65 household’s income in 2021 was over twice the average in 1979, even after accounting for inflation. And why retirees’ incomes have grown significantly faster than incomes for working-age Americans.

P.S. If you’re interested in more data and analysis like this, you should be looking forward to the April release of my first book, The Real Retirement Crisis!