(Bloomberg) — BlackRock Inc. Chief Executive Larry Fink warned of a “retirement crisis” facing the U.S. and called on baby boomers to help younger generations save enough for their future.

This, he said, will prevent them from becoming disenchanted with capitalism and politics in the coming years.

With people living longer but struggling to cope and plan properly, Fink used his annual letter as chairman of the world's largest asset manager to urge corporate leaders and politicians to follow “an organized, high-level effort” to rethink the retirement system. More than half of BlackRock's $10 trillion in client assets are managed for retirement.

“It's no wonder the younger generations, Millennials and Gen Z, are so worried economically,” Fink wrote in a note to BlackRock investors on Tuesday. “They believe that my generation – the baby boomers – are focused on their own financial well-being at the expense of the one that comes after.” And in the case of retirement, they are right.”

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Young people “have lost faith in the older generations,” Fink wrote. “The burden is on us to bring it back. And maybe investing for their long-term goals, including retirement, isn't a bad place to start.”

Fink said members of the younger generation in corporate leadership and politics have an obligation to help fix the system, and he questioned whether age 65 should still be the conventional notion of when people retire. Individuals are eligible for Social Security benefits as early as age 62, and those born after 1960 are considered full retirement age at age 67. Medicare health insurance coverage begins at age 65.

“No one should have to work longer than they want to,” Fink wrote. “But I think it's a little crazy that our anchor idea of ​​the right retirement age — 65 — dates back to the time of the Ottoman Empire.”

By mid-century, one-sixth of people worldwide will be over 65, up from 1 in 11 in 2019, Fink said, citing data from the United Nations. Nearly half of Americans ages 55 to 65 had no money in personal retirement accounts, he said, citing 2022 U.S. Census data.

“The federal government has prioritized maintaining entitlement benefits for people my age (I'm 71) even though that may mean Social Security will struggle to meet its full obligations when new workers come out. retired,” Fink wrote.

Fink said BlackRock will announce a series of partnerships and initiatives over the coming months to weigh in on key issues, including the average retirement age and how to encourage older Americans to keep working if they want to. The decline in defined benefit pensions has also made it more challenging for people, including conscientious savers themselves, to figure out how much they can spend in retirement, he added.

“The shift from defined benefit to defined contribution has been, for most people, a shift from financial security to financial insecurity,” Fink said.

Fink told Bloomberg TV in an interview with David West that certain parts of the private markets are “great investments” for retirement, especially in infrastructure.

Growing criticism

In the more than a decade since Fink began writing high-profile annual letters to corporate executives and shareholders, BlackRock's client assets have grown to more than $10 trillion, with significant stakes in companies, private equity and bond markets around the world. The letters, usually published at the beginning of each year, have given Fink and company a powerful voice on social and political issues — and drawn growing criticism from all sides.

The focus on retirement this year underscores a core part of BlackRock's investment business since its inception in 1988 and follows several years in which Fink used his papers to press for greater action on global warming, only to find themselves – and the company – in a political maelstrom.

Climate change advocates say the firm isn't taking strong enough action, while Republicans criticize Fink and BlackRock for allegedly hurting fossil fuel-producing states and promoting “woke” capitalism. Earlier this month, Texas officials said they would leave 8.5 billion dollars in school funding funds from BlackRock and criticized the firm for harming the state's energy interests.

Fink said it has stopped using the term ESG and over the past year has emphasized the company's work with energy firms. BlackRock has scaled back its participation in international climate investment alliances and given clients more say in how their shares are voted at company meetings instead of relying on the money manager to vote.

In the letter, Fink said he is now focused on “energy pragmatism.” Decarbonisation and the transition to clean technologies will take time, he said, and countries increasingly want to ensure they have reliable and secure access to energy sources, especially after Russia's invasion of Ukraine.

BlackRock has more than $300 billion invested in traditional energy firms and $138 billion in energy transition strategies, he said.

More comments from Fink's paper:

• The U.S. public debt situation “is more urgent than I can ever remember” and the 3 percentage points in additional interest payments the U.S. government must now pay on 10-year Treasuries compared to three years ago is “very dangerous”
• Private partnerships with governments are how major infrastructure projects will be built in the future, and BlackRock's $12.5 billion acquisition of Global Infrastructure Partners positions the firm to grow in the industry
• BlackRock is “particularly excited” about the business opportunity for the firm's bond managers given the rise in yields after 15 years of a low-rate environment and as clients are revising their fixed-income allocations