BlackRock CEO Larry Fink has advocated major reforms to the U.S. Social Security system, proposing the integration of private investment accounts to enhance retirement savings.
Speaking with Semafor at the BlackRock retirement summit last week, Fink suggested that allowing Americans to allocate a portion of their Social Security taxes into private accounts could yield higher returns by linking their savings to financial market gains.
“We have a plan called Social Security that doesn’t grow with the economy,” Fink said. “You’re detached from the economy, and you don’t feel like you’re winning.”
Newsweek has reached out to the Social Security Administration via email for comment.
Why It Matters
Past efforts to increase Social Security’s market exposure have faced pushback from Democratic lawmakers, who have argued that such a move would amount to privatization of the public program. However, with the current Republican-controlled Congress, Fink’s proposal is more likely to be taken seriously.
What To Know
Fink emphasized that private investment accounts would serve to supplement, not replace, the current Social Security system, providing the opportunity for higher returns than under the existing structure.
Fink also praised Australia’s “superannuation” program, in which employers contribute a percentage of an employee’s earnings into a fund which is then invested on their behalf. “The beauty of that plan, unlike Social Security … is that you’re investing in real assets,” he said. “You’re growing with your country.”
The Social Security Trust fund, which holds the surplus funds collected from taxes, is currently mandated to invest these in nonmarketable Treasury bonds. According to Semafor, these bonds have grown by 90 percent since 2003, while the S&P 500 has risen 777 percent over the same period.
During his second term, President George W. Bush proposed privatizing certain aspects of Social Security by allowing workers to invest a portion of their payroll taxes into personal accounts. The plan faced opposition from Democrats as well as Republicans and was never implemented.
The new administration has not commented on Fink’s proposal or the possibility of privatizing aspects of Social Security. However, the program, which currently has an estimated 68 million beneficiaries, is under scrutiny from the Department of Government Efficiency (DOGE), which has already suggested transferring other federal government functions to the private sector.
At a recent conference hosted by Morgan Stanley, White House senior adviser and de facto DOGE chief Elon Musk proposed that the U.S. Postal Service and the National Railroad Passenger Corporation (Amtrak) should be privatized.
“We should privatize everything we possibly can,” Musk said.
What People Are Saying
BlackRock CEO Larry Fink, as quoted by Semafor, said: “We have a plan called Social Security that doesn’t grow with the economy. You’re detached from the economy, and you don’t feel like you’re winning… I think more Americans can be a little more hopeful today with their retirement savings than just getting that bond payment.”
Democratic Representative John Larson, in an interview with CNBC, said that while investing Social Security savings could yield better returns, this would expose Social Security to market volatility, citing the impact of the 2008 financial crisis on 401(k) plans.
More Perfect Union, a progressive nonprofit news and advocacy group, posted to X: “The CEO of BlackRock says Social Security reform should include private investment. CEO Larry Fink says it’s a ‘problem’ that Social Security ‘doesn’t grow with the economy.’ BlackRock is a giant investment corporation, and he wants Americans investing more in private accounts.”
Devin Carroll, owner and lead adviser at Carroll Advisory Group and founder of retirement education platform Social Security Intelligence, told Newsweek: “I think Larry Fink has started an important conversation about how to improve retirement security. Social Security is a great safety net, but because its funds are only invested in government bonds, it doesn’t grow with the broader economy the way private investments can.”
Carroll pointed to an analogous model already operated by the federal government: the transition from employee pensions from the Civil Service Retirement System (CSRS) to the Federal Employees Retirement System (FERS), which included a “401(K)-style investment account.”
“Employees can choose how to invest their savings which has led to both better returns and lower costs,” he said. “In fact, according to the Office of Personnel Management, this change cut the per-employee cost of the federal retirement system nearly in half.”
Olivia S. Mitchell, economist and professor at the University of Pennsylvania’s Wharton School, told Newsweek that early 2000s proposals for voluntary adoption of personal accounts—into which around a third of payroll taxes would be redirected—“would have required some transition funding in the short-term, but in the long run it would have returned the system to solvency and indeed, sufficient revenue would have been received to improve benefits for lifetime low earners.”
“Unfortunately, nothing was done back then, so Social Security now faces insolvency within 7 years,” said Mitchell, who served on the 2001 bipartisan President’s Commission to Strengthen Social Security.
“Since 2010, the system has already been spending more than it is receiving in payroll taxes, so there’s no money in the system to invest,” she said. “Moreover, if people were to invest all of their FICA taxes themselves, this would mean that current and near-retirees’ benefits would have to be slashed, since in our pay-as-you-go system, today’s contributions pay for today’s retirees.”
What Happens Next?
Debate over Fink’s proposal is likely to intensify in the coming months as lawmakers and the public weigh the potential risks and rewards of linking Social Security to private investments, and as DOGE continues to continues to explore ways of reforming a wide array of government-controlled programs.
The post BlackRock CEO Suggests Changes to Social Security appeared first on Newsweek.
