It’s that time of year for investors large and small — Larry Fink, the powerful chairman of asset management giant BlackRock, issues his annual letter to CEOs.
In his latest letter, Fink takes on two of the most contentious issues of our time — retirement savings for the fast-growing population of seniors, and climate change. And in a note that is sure to spark debate, he strongly indicates that the retirement age of 65 should be raised in the U.S.
Here are the key things he discussed:
- Fink confidently states that the capital markets will be key to addressing this century’s biggest economic challenges — a secure, well-earned retirement, which has gotten more difficult in recent decades; and building the massive amount of energy infrastructure the world needs without harming the climate.
- For the first challenge, he touches a political third rail that is already sparking debate in the 2024 elections by stating that “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. Humanity has changed over the past 120 years. So must our conception of retirement.” As an example, he cites the Netherlands, where the country decided to gradually raise the retirement age “in order to keep their state pension affordable.”
- In addition, he calls for making retirement savings more automatic for workers through the creation of retirement plans that provide the flexibility of a 401(k) investment but also the potential for a predictable, paycheck-like income stream” — and he introduces BlackRock’s new product, LifePath Paycheck, which goes live in April.
- As for climate, he takes on environmental activists by calling for “energy pragmatism” — a path to decarbonization that is balanced with a recognition that we still need fossil fuels. He cites the examples of Germany, which has made huge investments in wind and solar power but also is building additional natural gas facilities.
- In an apparent bid to win favor with the state of Texas — which recently made headlines by pulling $8.5 billion in investment from BlackRock due to its ESG policies — Fink goes out of his way to praise the state for the way it’s approaching the energy transition, with a mix of renewables and fossil fuels.
- Fink is also optimistic about the role of technology in the energy transition — such as thermal batteries that heat up blocks of carbon with wind or solar; and carbon capture, in which carbon emissions are reduced by being trapped and stored in the ground.