Yahoo Finance Why Billionaire Larry Fink Called Retiring at 65 ‘Crazy’ — and Why You Should Be Concerned
Although Americans can file for Social Security retirement benefits as early as age 62 and most current workers won’t reach full retirement age until 67, BlackRock CEO Larry Fink locked in on age 65 in a letter to investors earlier this year. The billionaire investment advisor warned that the country is headed for a “retirement crisis,” and that one way to avoid it is to convince more people to delay retirement beyond 65 years old.
“No one should have to work longer than they want to,” Fink wrote in the letter. “But I do think 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.”
Find Out: Retirement Planning: Here’s How Much Money You Actually Need To Age in Place
Up Next: Owe Money to the IRS? Most People Don’t Realize They Should Do This One Thing
One of the biggest contributors to the retirement crisis Fink mentioned is uncertainty surrounding Social Security, which provides a big chunk of retirement income to millions of U.S. seniors. In about a decade, the program’s Old Age and Survivors Insurance Trust Fund (OASI) is expected to run out of money. When that happens, Social Security will be solely dependent on payroll taxes for funding — and those currently cover only about 77% of benefits.
Fink isn’t the only one who suggests that a higher retirement age is one way to address the looming shortfall. The Republican Study Committee and former 2024 GOP presidential candidate Nikki Haley have done the same.
While these ideas have gotten backlash in some quarters, others agree with Fink that age 65 should no longer be considered a normal retirement age. Here are three reasons he may be right.
People Are Living Longer
Longer lifespans mean longer retirements for many Americans. Working a few extra years can help them build bigger nest eggs while also boosting their Social Security payments.
“If you examine the practical implications of living longer, that means you need to save more than prior generations,” wealth advisor Clint McCalla told Forbes in an article last year. “By raising the retirement age, you are aligning with this new reality and setting the new standard.”
Be Aware: Suze Orman: Why Even Big Retirement Savers Are at Risk
Social Security Needs Fixing
The one thing that just about everyone agrees on is that Social Security is heading into uncharted territory. One reason the program built up surplus OASI funds is that baby boomers spent decades contributing to it through payroll taxes. Now many of them are collecting Social Security rather than paying into it — and there aren’t enough younger workers to make up the gap.
Raising the retirement age is one way to save money without cutting monthly checks directly, though others favor requiring the wealthy to pay a higher percentage of their income into the program.
Employer-Sponsored Retirement Plans Will Grow
For workers who have 401(k)s and other employer-sponsored retirement plans, working longer has the advantage of helping build bigger retirement savings — and that’s something many Americans can use. As CBS News reported, Fink wants companies to do a better job of making retirement investments more attractive to young people.
“As a nation, we should do everything we can to make retirement investing more automatic for workers,” he noted.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Why Billionaire Larry Fink Called Retiring at 65 ‘Crazy’ — and Why You Should Be Concerned
