Larry Fink, the CEO of the world's largest asset manager, Blackrock, is sounding the alarm on America’s retirement crisis, making it a focal point in his latest annual letter to investors.

In a letter titled, “Time to rethink retirement,” Fink said Americans who retire at 65 need to ponder how they’re going to afford longer lives.

“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,” he said.

Data from the Social Security Administration shows that Americans who make it to 65 have another 21 to 23 years of life left—far exceeding the average life expectancy at birth.

Most people saving for retirement won’t have enough money banked by the time they reach 65 to live those extra years comfortably, which means they’ll have to work longer or face increased financial stress as their health deteriorates.

The big problem, according to Fink, is that building “a secure, well-earned retirement is a much harder proposition than it was 30 years ago.” In fact, it’ll be “a much harder proposition 30 years from now,” he predicted.

“America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity,” he wrote, implying that the solution will rely on a combination of government and private-sector initiatives.

Experts say investing for retirement has gotten harder in recent years, as inflation and market volatility have added new layers of uncertainty. Even investing with hedge funds is far from a slam dunk, as their returns often lag behind the S&P 500, according to Barron’s research.

Unfortunately, one of the biggest risks investors face is completely outside of their control—and could mean the difference between a comfortable retirement or financial hardship.

The risk of retiring in a bear market

Investors who seek financial advice are warned repeatedly against timing the market. Instead, they’re told to diversify their portfolio and avoid making permanent changes in response to temporary market conditions.

But what about those investors who retire during a bear market?

According to a Vanguard study, traditional investors who enter retirement during a bear market face the one-two punch of outliving their money by 31% while reducing their income by 11%.

A traditional investor is one whose portfolio is made up exclusively of stocks and bonds.

“Every withdrawal turns a negative return, which is temporary in nature, into a permanent impairment of the balance. The amount withdrawn at a considerable loss reduces the opportunity to recover over the long term,” Vanguard researchers wrote.

Whereas market downturns should be welcomed by investors as it allows them to purchase more assets at a cheaper price, for retirees, complete opposite is true.

“It matters most at retirement when you’re selling assets for income,” according to Wade Pfau, a professor of retirement income at The American College of Financial Services. “You need to sell a larger number of shares to get the same amount of money. Those shares are then gone, so even if the market bounces back, your portfolio won’t recover as much.”

Since the 2008 financial crisis, investors haven’t had to worry about an extended bear market—until 2022 came along. That year marked one of the worst periods for markets in decades, reminding investors of just how bad things can get when interest rates have to rise to tame inflation.

Since 2022, David Hunter of Contrarian Macro Investors has predicted the continuation of the bull market, followed by a depression-style crash that could make retiring comfortably close to impossible.

“I was a very lonely bull at the Oct 2022 bottom & the only one seeing the magnitude of the rally we’ve had in the last 18 months,” he wrote on social media platform X.

“We’re in the melt-up before global bust,” he said in an interview, referring to the coming bear market.

While Hunter is a contrarian, he’s been right so far. His point is that extended bull markets like we’ve seen since the previous financial crisis shouldn’t be taken for granted anymore.

The unfortunate reality for many Americans is they don’t even have the luxury of investing in a bull or bear market because they simply don’t have any retirement savings. And many more simply haven’t saved enough.

Retirement: By the numbers

While younger generations have discovered the benefits of 401(k) savings, millions of older Americans didn’t get the memo.

According to the U.S. Census Bureau, 50% of women and 47% of men ages 55 to 66 have no retirement savings.

“Many adults approaching retirement age may not be financially prepared to retire,” wrote Brittany King, a survey statistician with the Census Bureau.

Meanwhile, Retirable’s 2023 State of Retirement study found that nearly two-thirds (64%) of respondents said they don’t have enough money to last them through their golden years. And 67% of respondents haven’t met with a financial adviser to create a plan for retirement.

“For many clients, retirement is a heavy mental burden,” Emily Lapp, chief operating officer at Tanner Creek Capital of Stifel Independent Advisors, told Investment News. “It’s difficult for them to grasp whether or not their savings are going to be sufficient to live comfortably in their later years.”

The financial struggles of older Americans will likely appear much greater by 2030 when those aged 65 or older will outnumber children under 18 for the first time.

As Retirable noted, this will mark a pivotal “transformation” for the nation, “evolving how it transitions its workforce into retirement, funds vital programs like Medicare and Social Security, and how retirees themselves will spend their golden years.”