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To Larry Fink, CEO of $90 trillion asset manager BlackRock<\/a>, the economy\u2019s biggest worry isn\u2019t high inflation or a possible recession: it\u2019s a lack of hope. More specifically, it\u2019s about how millennials and Gen Z just don\u2019t trust boomers after looking at what they\u2019ve done to the economy. And you know, what, he says: They\u2019re right.<\/p>\n In his annual letter to BlackRock shareholders released Tuesday<\/a>, Fink sounded alarmed as he looked back on his parents\u2019 retirement situation, his own generation\u2019s expectations of retirement, and what lies ahead for the young workers who have to shoulder the load. And he said he was stunned by one particular fact about Gen Z.<\/p>\n Fink cited a recent finding by a long-running University of Michigan survey<\/a> that tracks 12th graders\u2019 public sentiment. Compared with 20 years ago, it found \u201cthe current cohort of young Americans is 50% more likely to question whether life has a purpose. Four-in-10 say it\u2019s \u201chard to have hope for the world.’\u201d It\u2019s the worst result since 1976, the Wall Street Journal<\/em> reported<\/a>. Let that sink in, Fink writes: \u201cI\u2019ve been working in finance for almost 50 years. I\u2019ve seen a lot of numbers. But no single data point has ever concerned me more than this one.\u201d<\/p>\n Fink pointed to the retirement system as a key flashpoint. As the nation\u2019s demographics trend older and more Americans live longer, Social Security and other retirement benefit plans are struggling to keep up\u2014and so far, nobody\u2019s been willing to make the massive changes required to make sure that young workers will be able to collect their benefits once they reach retirement age.\u00a0<\/p>\n As Fink sees it, the blame for the retirement crisis\u2014and, by association, Gen Z\u2019s general malaise about their economic futures\u2014sits squarely on the shoulders of his generation. As Baby Boomers have continued to kick the retirement-reform can down the road, they\u2019ve lost the trust of younger Americans, who can already foresee that they\u2019ll be left to deal with the consequences.<\/p>\n \u201c[Young people] believe my generation \u2014 the Baby Boomers \u2014 have focused on their own financial well-being to the detriment of who comes next,\u201d Fink wrote. \u201cAnd in the case of retirement, they\u2019re right.\u201d<\/p>\n Fink pointed out that the retirement crisis isn\u2019t as far away as many people think. The Social Security Administration has said it won\u2019t have enough money to pay people their full benefits as soon as 2034. Even as new medical treatments, including drugs like Ozempic and Wegovy, help people live longer, the retirement age isn\u2019t budging to make up for all those extra years of collecting benefits.<\/p>\n \u201cNo one should have to work longer than they want to. But I do think it\u2019s a bit crazy that our anchor idea for the right retirement age \u2014 65 years old \u2014 originates from the time of the Ottoman Empire,\u201d Fink wrote. \u201cAs 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 extra years.\u201d<\/p>\n Fink pointed out that the Netherlands started raising the retirement age to correspond with rising life expectancy a decade ago, and Japan has been enacting policies to boost its labor participation rate since the early 2000s. He didn\u2019t go so far as to explicitly advocate for increasing the retirement age, but Fink\u2019s message is clear: something needs to budge.<\/p>\n Retirement is just one piece of the puzzle. When it comes to the economy at large, Fink\u2019s biggest fear is fear itself\u2014specifically, young Americans\u2019 growing lack of confidence about putting their money in capital markets. Fink wrote that he sees popular confidence in investing as a key factor in America\u2019s historical success as a nation.\u00a0<\/p>\n Whereas other countries have struggled to convince citizens that putting their money to work by investing it is just as safe as keeping it in cash, Americans have historically been much more trusting of capital markets. That\u2019s been a key driver of economic growth and American supremacy on the global stage. Fink observes that that trust is waning, especially among young Americans\u2014and that risks costing the country its economic identity.<\/p>\n \u201cHope has been the nation\u2019s greatest economic asset \u2026 If future generations don\u2019t feel hopeful about this country and their future in it, then the U.S. doesn\u2019t only lose the force that makes people want to invest. America will lose what makes it America,\u201d Fink wrote. \u201cWithout hope\u2026we risk becoming a country where people keep their money under the mattress and their dreams bottled up in their bedroom.\u201d<\/p>\n Fortune<\/em> recently reported<\/a> that the U.S. is one of just four countries where young people report being significantly less happy than older citizens, per World Happiness Project data. A post-pandemic surge in social anxiety<\/a>, on top of a nationwide cost of living crisis, has soured many young adults\u2019 views on the economy. This collides with the fact that their wallets are collectively pretty full: New York Fed data shows<\/a> that Gen Z and Millennials have grown their collective wealth by 80% in the past four years, while still trailing well behind boomers.<\/p>\n Fink argues that the solution to the confidence crisis gripping the economy for his generation to give up some control, and listen to their younger counterparts\u2014the future leaders who will be left to clean up the broken retirement system.<\/p>\n \u201cHow do we get our hope back? \u2026 Any answer has to start by bringing young people into the fold,\u201d Fink wrote. \u201cYoung people have lost trust in older generations. The burden is on us to get it back. And maybe investing for their long-term goals, including retirement, isn\u2019t such a bad place to begin.\u201d<\/p>\n<\/div>\n\nThe audacity of hope<\/h2>\n
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