225. Retirement Planning: What New Legislation Could Mean For Your Retirement Account
Episode Description:
In a recent BlackRock survey of registered voters, more than 75% of retirees said they wished they had saved more money for retirement. And with the recent passage of the SECURE 2.0 Act now in effect, opening up new opportunities for savers, investors are considering how to save and build wealth for the future. Shoring up emergency savings is protective of retirement savings, according to research by The BlackRock Foundation. So how can investors ensure they’re pulling all the levers at their disposal to retire on their own terms?
Rob Crothers, Head of U.S. Retirement for BlackRock, will discuss the current state of the retirement landscape and help us unpack a toolkit for retirement savers that’s been proposed by the Bipartisan Policy Center and how investors and employers can plan for the future.
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Retirement, retirement planning, retirement account, bipartisan policy center, 401k
Sources: BlackRock Global Family Office Report 2025; ‘To Spend Or Not To Spend’, Dec 2024, BlackRock; ‘More Than 1 Million Americans Now Enrolled In Auto-IRA Programs’, AARP 2025; Callan DC Trends Survey, Callan 2025; Survey of Household Economic Decision-Making, FED 2025; Bipartisan Policy Paper, BlackRock 2025; The Gut Wrenching Play In Investing Right Now: Buy and Hold, WSJ May 2025; Financial Stress Through a Crisis, Build Commonwealth org, 2021
Written disclosures in each podcast platform and each episode description:
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener.
Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies.
For full disclosures go to Blackrock.com/corporate/compliance/bid-disclosures
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<<TRANSCRIPT>>
Oscar Pulido: In a recent BlackRock survey of registered voters, more than 75% of retirees said they wish they had saved more money for retirement. And with the recent passage of the Secure 2.0 Act now in effect opening up new opportunities for savers, investors are considering how to save and build wealth for the future. So how can investors ensure they're pulling all the levers at their disposal to retire on their own terms?
Rob Crothers: The best part about retirement is it's one of the few universals. Everybody that's working today aspires to retire someday. The question is, what does that look like for you, Oscar? Or what does that look like for me? And the only thing I can tell you right now is it's going to look different for you and it's going to look different for me.
It's going to happen at a different time. It's going to happen with different aspirations. but helping people save. Then savers become, investors tap into the power of capital markets, and then those investors compounding over time become spenders to fulfill their dream is really what retirement is all about.
Oscar Pulido: Welcome to The Bid, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.
Coming up, I'm joined by Rob Crothers, head of US Retirement for BlackRock. Rob will discuss the current state of the retirement landscape and help us unpack a toolkit for retirement savers that's been proposed by the Bipartisan Policy Center and how investors and employers can plan for the future.
Rob, thank you so much for joining us on The Bid.
Rob Crothers: Oh, thanks for having me, Oscar. Great to be here.
Oscar Pulido: Rob, the topic of retirement is a topic that we've been covering on The Bid periodically over the past year. And really, I'm thinking back to the episode that we did with Larry Fink when he wrote his annual letter to investors in 2024, and retirement was a big headline in that letter. So since then, it's again been a recurring topic. Talk to me a little bit about the current landscape of retirement and what's changed over the past year.
Rob Crothers: There's a lot going on. retirement is certainly core to everything that we do at BlackRock - half of our assets are retirement related1. When I think about what's going on in the US specifically, which is where I'll spend most of my time, I'd say retirement is building from a strong foundation.
I think one of the benefits that we have is over the last couple of years, we've seen two pieces of, of really generational policy come out of Washington. We call them the SECURE Acts, Setting Every Community Up for Retirement Enhancements. SECURE Act one in 2019 and in two in 2022 that really laid the foundation for the modernization of the retirement system in the U.S.
So, we're covering more people than ever before with workplace retirement plans. When you have access to a plan, you're 80% more likely to save. We've got best practices, that are really being embraced by corporate, employers in helping their workforces save. And then you're thinking about what more can we do? How can I build from that strong foundation, add things to help people prepare for and say for emergencies, how do I help cover more people in the workplace plans, that exist today? And then things like how do I offer retirement solutions that aren't just saving solutions, help people spend in retirement, help people live the life that they want.
The best part about retirement is it's one of the few universals. Everybody that's working today aspires to retire someday. The question is, what does that look like for you, Oscar? Or what does that look like for me? And the only thing I can tell you right now is it's going to look different for you and it's going to look different for me.
It's going to happen at a different time. It's going to happen with different aspirations, but helping people save, then savers become investors, tap into the power of capital markets, and then those investors compounding over time become spenders to fulfill their dream is really what retirement is all about.
Oscar Pulido: It is hard to find something that almost everybody agrees with, but it does feel like most people agree with. And I know that BlackRock recently hosted a retirement summit in Washington, D.C. There's a new paper that you and your team have co-authored with the Bipartisan Policy Center, which was an important stakeholder in that summit. Talk to me about the paper. What was the genesis? What are some of the recommendations that are talked about in this piece?
Rob Crothers: It's a great call-out. The summit earlier this year was BlackRock acting as convener, so we didn't show up with answers. What we showed up with was a call to action and a big statement, a question statement. The question is, what more can we do and how can we do better? And the statement, or call to action is, it's all of our work. So, everybody in that room and that room was policymakers, small business owners, industry participants, people involved in retirement everyday, other asset managers, with a broad form objective of having the conversation.
The paper really is to build from the momentum of that moment. The paper itself really goes through a series of broad form recommendations, but the idea that as a group we can, provide more access to workplace plans.
So today, 56 million American workers don't have access to a plan from their employer2. Think your gig workers, self-employed, et cetera. That's despite people being 80% more likely to save for retirement when they have access to one. So, we know it works, it's just a question of how do we expand that to more people. Things like how do we instill and build on the best practices that exist when people do have access to a plan, automatically enrolling individuals into a retirement plan. For example, when you automatically enroll, individuals work workers into a retirement plan, 95% of them participate when you leave them on their alone, on their own to opt in, only two thirds participate.
So, the idea of using best practices, not just to help people save, but also things like reducing plan leakage, helping people take retirement plans with them. So, for every dollar, people under the age of 50 save for retirement in any given year over their working life, something like 22, 23 cents of that dollar leaks out of the retirement system because people have to withdraw early or tap into it for emergency savings, et cetera, so on and so forth. Foundational things, I'll give you a couple examples there, of how do we build from what's working? Then how do we take best practice and really instill it in the ecosystem to bring more people into retirement savings. And then once they're there, help them achieve the goal that they want.
Oscar Pulido: Rob. What you're describing sounds like if there are certain mechanisms put in place, it encourages better saving behavior for retirement. I think you started to touch on a few of these, but just elaborate a little bit more on what some of those mechanisms might be.
Rob Crothers: No, that's a great question, Oscar. So, it's not just a single tool, right? Think about it as a broad toolkit that, employers can use, but individuals can use too.
The first is, as I touched on a bit earlier, things like automatic enrollment. When you have access, making sure that people contribute. But I'd add to that, in the defined contribution space, things like the default investment concept. Today, 96 odd percent of US retirement plans, corporate retirement plans use, the target date fund as the default investment3. A relatively simple, low cost, professionally managed, risk-based solution, that allows an investor to take different and appropriate levels of risk, across their investing lifecycle default. Very important. The idea of what we would call automatic escalation, that once I've contributed, say starting at a 3% level standard, contribution rate, over time, I can afford to take that three and make it four or take that four and make it five. And in an ideal world that's compounding alongside wage growth, I'm making more money at the same time. So, that 4% is of a higher, higher numerator as well.
So I think, think about the toolkit as things, that can be used relatively simple things, but best practice to encourage, investors to not only save more and save often, but once they've saved, invest in, appropriate things that, help them grow their wealth, tap into capital markets and ultimately grow their retirement savings.
Oscar Pulido: And we've had conversations with guests in the past about how investing is a very emotional exercise, and it sounds like some of the things that you're describing try and take a little bit of the emotion out of it and hopefully lead to better outcomes in the longer term. Rob, in the paper, there are recommendations that go beyond retirement saving, specifically. So maybe you can talk about some of the other mechanisms or tools that are in there that talk about how you build wealth over a lifetime.
Rob Crothers: The first thing anybody should do is to save as much as they can, as often as they can, as early as they can. It's not really a tool or a recommendation rather than the power of compounding capital markets is amazing when you think about a 30, 40-year investment time horizon.
We have lots of conversations with employers about things like emergency savings. Individuals, any Federal Reserve estimates fewer than 20% of adults, say the largest expense they can, can handle on an emergency is only a hundred dollars4. That's a challenge for people if you can't live today, living paycheck to paycheck, saving for an outcome 30, 40 years in the future, I think is incredibly difficult. So again, we've done some work with some organizations through our foundation, to build emergency savings, into retirement plans,
I have some great conversations sometimes from my seat and one of the best was, recently was with a large employer, retail-based employer. They have corporate workers, those, those in management, and then they have, your line workers, man in the cash register of the store. and as they think about retirement, the biggest thing that they would acknowledge is that there isn't a homogeneous population there. The challenge is that someone in management faces in saving for retirement are very different than the folks that are working in their stores day-to-day. And in adopting something like emergency savings, for the vast majority of their workers, the first period of financial stress they have, they cash out their 401k and they never come back. So, they're talking about how do I help supplement, my benefits package to add, add emergency savings?
I would add too, in addition to investments, focus on income and retirement. So income is perhaps the most talked about outcome in retirement space today. we as individuals, to your point on the personal nature of all of this, are very anchored on what's my retirement balance. But we've not conditioned people to think about translating assets into income. And you every day in your working life get a paycheck every two weeks or every month. So you have income, that translation point from assets to income is actually quite challenging for individuals.
So, we did some research a couple of years ago where, 20 years after retirement, the individuals we surveyed, working with, with EBRI, had 80% of their pre-retirement savings. So, 20 years into retirement, they still had 80% of their money left5. The idea underneath all of that is, is there likely underspending in retirement? But how do you help people spend a little bit of guidance, modeling tools, potentially advice in some cases, but also through solutions. And when I say income, the idea of lifetime income or guaranteed income akin to what might have used to be the case in a defined benefit plan, but delivered through a defined contribution plan is certainly a big topic today.
Oscar Pulido: You covered a lot of things there Rob. And I'm going to go back to what you mentioned about the emergency savings, the very small amount that can seemingly crop up in somebody's life and then, requires them to tap into their retirement plan, and then it's a bad spiral. And perhaps one of the ways to get people behaving appropriately is to do it at an early age. And I know that at the summit there was a discussion and there has been amongst policy makers as well of how do you encourage better behavior, better savings behavior at an earlier age. What should parents be doing with their kids to encourage better habits of wealth-building at a young age? What can we be doing at that stage of life?
Rob Crothers: I love the question. So, I've got a 10-year-old, I know you've got kids as well. I think talking about money with your kids is an incredibly important thing and starting early to educate. I remember when I was a kid very different environment. we had a little past book savings account, and we'd bring my little book and every dollar I got from my birthday or whatever would go into my savings account. But I still remember that 40 years later in, instilling in me, savings are important. Investing is important, thinking about planning for the future is important.
I was having a conversation with a colleague the other day who actually is doing quite a good job with her two boys. helping them think about budgeting and. we both came to the realization that the, that more than likely our children are never going to write a paper check. it's a really interesting phenomenon thinking back, to the world in which, where we came
The idea that you can fund in accounts at birth that, sometimes you can contribute more to, sometimes it just compounds, based upon some investment return that can generate real wealth over time. has two sort of added effects, right? the first is, you instill in, in an individual, in, in investment-based mindset. a thousand dollars, or $500 contributed at birth with, $500 annual contributions could be $20,000 at age 18 or age 19, like meaningful money for individuals.
The second thing, I think it does is, is really starts to get individuals focused on, building wealth at an early age. So, the idea, beyond the translation of $500 into $20,000, but the idea that in order to grow wealth, you need to in invest, or you need to save, is foundational to virtually everything that we're talking about here.
Whether your goal is buying a house, whether your goal is paying for college, whether your goal is getting married, saving for honeymoon, saving for a vacation, or retiring someday. The earlier we can start engaging, children around better savings behaviors, how to invest, the principles of investing, diversification, all of the things that we live and breathe and feel every day, the better off that next generation will be.
Oscar Pulido: I do have kids, I know you mentioned a 10-year-old, but you made me remember back to when I was in high school and I had a job and I was making a not much of a hourly wage, but my mom said, now you have enough to invest in a mutual fund and you should think about doing that. And I did. And it just instilled a good habit. And so much of what I think we do as adults is maybe starts at a younger age.
Rob, let's bring it back to the present. We've seen a lot of volatility in the market this year. and at one point, retirement accounts took quite a hit when markets sold off before they bounced back. BlackRock actually surveyed, investors - our Global Family Office team surveyed investors - and about 60% of them came back with more of a bearish outlook just based on what's been going on around, things like tariffs and trade policy. But when we're talking about, the habits for saving for retirement and building wealth early, how does that translate then to when markets go through a downturn?
Rob Crothers: Yeah, it's probably one of the things that I get most frustrated about. Individuals, I'd say either fall into one of two camps. They are either the camp that doesn't engage and just lets it be, or they're in the camp that engages too often. retirement savings is one of those things that you need to be mindful of, especially early in your career, and you need to save as often as you will, but it's not something you should be looking at every day.
You look at it every day, you're going to see every up, every down. And you're going to feel every up and every down, to your point on the emotional tie in earlier, similar survey to the family office survey that was done of registered voters around the same time showed that, almost 40%, worry about the retirement savings once a day6. That number is where it was because of the market volatility that occurred. what I would say to individuals saving for retirement, specifically those kind of earlier in their working lives is patients stay the course, stay invested. it's the things we talk about often that time in the market, not timing the market. I get that it doesn't feel great to see, five, 10, 15% decreases in, in wealth. But as you and I have seen since that period, right, markets have recovered.
One of the interesting things, that we saw during that period too, is that a number of participants. And in some cases, five or 10% of participants, actually increased their savings rates. So, think about what is the opportunity and keeping a long-term perspective is actually really important.
So, the only way you're going to have adequate savings is by staying invested. The only way that you're going to maintain your standard of living is by continuing to contribute and contribute more when you can and keeping your end goal in mind- wealth maximization so that I can maintain my standard of living and I can go hang out on a boat and you can go, hang out on the islands or whatever it is you want to do in your retirement.
Oscar Pulido: I don't know if I have that much saved for yet, but I suppose that's a goal. Rob, just to wrap up, as you think about the retirement landscape and there's so much to try and follow across policy and sort of investor behavior and market volatility, but what are some of the things that you would want investors, to think about that, that they could take action on today?
Rob Crothers: Yeah, look, I think that the very simple framework I use is everybody that is a potential retirement saver, is on somewhere on a continuum. It's the continuum from am I a saver? Am I an investor? And as I get to retirement, how do I fulfill the spending needs that I need?
In retirement land we have a saying sometimes that, doesn't matter really what capital markets do. Nothing, nothing can combat an under saving. So, starting saving early, saving as much as you can, compounding as much as you can. This is a universal challenge. This is something that everybody aspires to, but it's going to look a little bit different for me. How you get, there's going to be a little bit different than I do. But the things that I think we all know are the earlier I start saving, the more I save and capping into the power of capital markets are going to be how we both get there.
Oscar Pulido: You pointed out that maybe we haven't spent enough time talking about retirement in recent years. I think that's starting to change. today is a good example of that, and talking about this topic maybe makes people more aware and helps them take some action. Rob, we appreciate you sharing your insights on the retirement landscape and thanks for doing it here on the bid.
Rob Crothers: Oh, glad to be here. Thanks, Oscar.
Oscar Pulido: Thanks for listening to this episode of The Bid. Next week, we take stock of what the rest of the year holds for markets, as we hear from the BlackRock Investment Institute on their midyear outlook for 2025. Make sure you don't miss it by subscribing to The Bid wherever you get your podcasts.
<<THEME MUSIC>>
Spoken disclosures at end of each episode:
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener.
For full disclosures go to Blackrock.com/corporate/compliance/bid-disclosures
[1] BLK estimates based on AUM as of December 31st, 2024 and Cerulli data as of 2023. ETF assets include only qualified assets based on Cerulli data, and assumes 9.5% of institutionally held ETFs are related to pensions or retirement estimates includes assets defined as “related to retirement” and are based on products and clients with a specific retirement mandate (e.g., LifePath, pensions). Estimates for LatAm based on assets managed for LatAm Pension Fund clients, excluding cash.
[2] AARP, More Than 1 Million Americans Now Enrolled in Auto-IRA Programs, 2025
[3] Callan, 2025 DC Trends Survey, 2025
[4] U.S. Federal Reserve, Survey of Household Economics and Decision-making, 2025
[5] Employee Benefit Research Institute estimates based on Health & Retirement Study (HRS, 1992-2014) Consumption and Activities Mail Survey (CAMS, 2005-2015). Retirees were segmented into three groups based on pre-retirement non-housing retirement assets – $0 to less than $200,000 (lowest wealth), $200,00 to less than $500,000 (medium wealth) and $500,000 and above highest wealth).
[6] BlackRock, Redefining Retirement Survey, 2025. The survey provides insights from a research study of 1,000 national registered voters in the United States. The survey is executed by Public Opinion Strategies, an independent research firm. All interviews were conducted from April 17 through April 22, 2025. The margin of error is +/- 3.1%.
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