The Government Is Culpable for America’s Retirement Crisis – Investing.com

The Government Is Culpable for America’s Retirement Crisis – Investing.com

America faces a retirement crisis.

The chairman of the world’s largest asset management firm is sounding the alarm. BlackRock (NYSE:) CEO Larry Fink told CNBC last week that he sees a “silent crisis of retirement.”

Fink cited ultra-low interest rates, combining with elevated inflation rates, as steadily diminishing the real value of retirement savings.

“People are going to have to, unfortunately, whether they like it or not…work longer because they’re not earning the same returns on their savings,” he said.

Of course, they could increase their allocation to equity markets and hope they outperform low-yielding bonds and cash instruments. But then they would be exposing themselves to heightened volatility as they head into their golden years.

For decades, the conventional retirement planning advice has been to reduce exposure to the stock market and increase fixed-income allocations as retirement approaches. The thinking is that retirees may not have enough time to see their stock portfolios recover from a severe bear market.

In decades past, income instruments such as government bonds and bank certificates of deposits provided decent yields. Today, with a Treasury note yielding just 1.3%, that is not the case.

As for Social Security, that supposed safety net for retirees, annual cost of living adjustments (COLAs)