• America has a retirement crisis on its hands.

• But there are things the US can do to help people better prepare for post-work life, Larry Fink said.

• The BlackRock chief outlined three things to help alleviate financial burden on retirees.

America has a real retirement crisis on its hands — and there are three things it can do to help solve it, according to BlackRock chief Larry Fink.

In his annual letter to investors, the CEO of the world's biggest asset manager pointed to an unfolding crisis for current and future retirees. Over half of Americans over the age of 65 are living off less than $30,000 a year, according to 2022 Census data. Meanwhile, 45% of middle-income households risk not keeping up with their pre-retirement living standards once they turn 65, according to data from the Center for Retirement Research.

That's complicated by the fact that Social Security may not be able to provide the same support for younger workers when they reach retirement age, Fink said. According to the Congressional Budget Office, the Old-Age and Survivors Insurance Trust Fund, one fund within the Social Security program, is expected to be depleted within the next 10 years.

"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 years," Fink said. "Today in America, the retirement message that the government and companies tell their workers is effectively: 'You're on your own.'"

That needs to be changed, he said,  detailing three ways the US could better prepare people for retirement age.

1. Make investing automatic for workers

Americans have fallen behind on their retirement savings, largely because many can't afford to set aside cash for the future, while a large portion of workers — around 57 million, according to the AARP — don't have access to a retirement plan at work.

46% of Americans aged 55-65 don't have any cash invested in a personal retirement account, according to 2022 Census data.

More intuitive investment options, like target date funds and mandates for employers to contribute to a retirement plan for their employees, may be able to help, Fink suggested.

He pointed to the Superannuation Guarantee, an automatic employer contribution program based in Australia. That prevented the nation from heading into a retirement crisis in the 90s, with Australia now home to one of the largest retirement systems in the world.

"As a nation, we should do everything we can to make retirement investment more automatic for workers," he said.

2. Help retirees spend their savings

Most retirees are uncomfortable dipping into their pile of savings. The average retiree still had 80% of their pre-retirement cash even nearly 20 years after exiting the workforce, according to a 2018 BlackRock survey.

That trend has led BlackRock to develop its LifePath Paycheck, a program that will automatically dole out paychecks to retirees from their retirement accounts.

"The retirement paradox has a simple explanation: Even people who know how to save for retirement still don't know how to spend for it," Fink said.

3. Give young people a reason to want to invest

Fear is one of the main obstacles preventing young people from investing in their retirement, Fink said. Just 40% of 12th graders say it's "hard to have hope for the world," according to a University of Michigan public sentiment survey.

That compares to public sentiment in the mid-90s and early 2000s, when 60% of 12th graders said they were optimistic about earning a degree, obtaining a good job, and obtaining more wealth than their parents, a separate analysis found.

"I've been worker in finance for almost 50 years. I've seen a lot of numbers. But no single data point has ever concerned me more than this one," Fink said. "If future generations don't feel hopeful about this country and their future in it, then the US doesn't only lose the force that makes people want to invest. America will lose what makes it America."

Better solutions to prepare young people for retirement is one such way to boost hope, he added.

"Perhaps the best way to start building hope is by telling young people, 'You may not feel very hopeful about your future. But we do. And we're going to help you invest in it,'" Fink said.

Retirement is increasingly seen as a luxury, especially among millennials and Gen Z. 23% of Gen Zers say they don't expect to ever retire, according to a 2022 McKinsey & Company survey, the most pessimistic outlook of any age group.

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