Five Retirement Challenges and Solutions for Them

John L from NJ posted over 2 years ago:

Larry Fink is talking his book. Black Rock benefits when people save more for retirement.

Barry from TX posted over 2 years ago:

I waited patiently to read AAII members' reactions to this article. Other than John L., none were moved enough by Mr. Fink's homilies to comment. Maybe John L. nailed it: Mr. Fink seeks to benefit from his book and the AAII crowd is too experienced and sophisticated in the worldly ways of multi-billionaires to be lulled into finding very much useful to them in Mr. Fink's book that they don't already know. -- they are aging; they have to work longer; they need to be nudged to plan and save; they will withdraw too much of their funds; and they fear the future because all this IS their future. Charles gave us a link and I decided to read Mr. Fink's "CEO's Letter to Shareholders" which is the main resource for his book because I have this curiosity to follow the provenance of stuff people throw in my face as "the truth." It was 30 pages long. I am sure this was never delivered to a live audience. It would have been an hours-long sermon with very little "new stuff" to learn. Mr. Fink tells us that capital markets are the reason the United States is so blessed and that he hopes the world will also become like us. His prime examples of success through investing in capital markets are his parents and himself. Quote "If my parents had $1,000 to invest in 1960, and they put that money in the S&P 500, then by the time they’d reached retirement age in 1990, the $1,000 would be worth nearly $20,000." In 30 years they saved $20,000. Meanwhile their profligate son "wanted to help people retire like my parents did. That’s why we started an asset manager — a company that helps people invest in the capital markets ..." as if there were no capital markets available to his parents from 1960 to 1990. Warren Buffet among others would beg to differ. Mr. Fink is proud that "in the late 1970s and early 1980s ... I played a role in the creation of the securitization market for mortgages." After Mr. Finkglosses over the impact of the S&L crisis in the 1990s" that "poor risk management and loose lending practices led to a raft of failures costing U.S. taxpayers more than $100 billion dollars," Mr Fink celebrates the miracle of mortgage securitization that "allowed banks not just to make mortgages but to sell them. By selling mortgages, banks could better manage risk on their balance sheets [by passing the risk on to others] and have the capital to lend to home buyers [to fund more bad quality mortgages ], which is why the S&L crisis didn’t severely impact American homeownership. Eventually, the excesses of mortgage securitization contributed to the crash in 2008, and unlike the S&L crisis, the Great Recession did harm home ownership in the U.S. The country still hasn’t fully recovered in that respect. But the broader underlying trend — the expansion of the capital markets — was still very helpful for the American economy." Wow! Somehow, I just can't get my brain to remember the 2008 Great Recession as a joyous time to celebrate how the "mortgage securitization" system [Mr. Fink proudly helped found earlier] saved America. I am starting to think Mr. Fink did read this speech that may have been prepared for him. First, he did not do his parents right by sharing his investing expertise. Next, he saved America by creating the very system that enabled banks [the same folks who helped his parents NOT invest] to generate poorly secured mortgages that were then securitized [bundled and sold off to pass the risk on to other greedy investors [like Deutsche Bank] so they could have "reinsurers" [like American International Group (AIG), Conseco, and Executive Life Insurance Company[ underwrite [insure them for a fee] and sell them off [in tranches] as "safe" investments. This shows just how unsophisticated I am. If this were a "The Titanic" remake, I see Mr. Fink in the Captain's lifeboat [smoking a Havana] and my ancestors "safely" in the water paddling for shore 150 miles away. I could quote even more examples of Mr. Fink's feigned noblesse oblige, but these few financial facts say the most to me. #1 Mr. Fink earns $27M as the CEO of BLK, the largest asset manager in the world. a year; by comparison, if you earn $100K a year, Mr. Fink makes the same amount as you do by 3 AM New Year's Day, before he goes to bed (or work Jan 2. #2Mr. Fink has a net worth of $1.2B; by comparison, if you have a net worth of $1M, Mr. Fink's net worth equals 1,200 AAII members with $1M new worth. I would guestimate that he is worth more than AAII members combined including ALL the AAII staff. #3 As BLK CEO he commands $12T [or $12,000,000,000,000] AUM; by comparison, the entire US GDP in 2023 is $27.36T -- about half as much as BLK -- and the US federal government spent $6.2T in FY23, or about one-half as much as BLK. To put Mr. Fink's position into a long-term historical perspective, no one entity or person has had more wealth than their sovereign country or residence since Henry VIII in the early 1500's. All Mr. Fink needs is 5 more wives and he can claim that record too, but, alas he probably won't. Larry has been married to his wife Lori Weider, his high-school sweetheart, since 1974 for almost 50 years.