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BlackRock’s Kapito: People in cash won’t be able to ‘retire in dignity’

Sarah Paynter

A long life can be a problem if retirees have not invested their money, according to BlackRock president and co-founder Rob Kapito.

“They’re never going to be able to retire in dignity if that money is not invested,” Kapito told Yahoo Finance at the 50th annual World Economic Forum in Davos.”You can’t invest for the future in the future.”

Investing can provide a continual source of income when, with ever-increasing lifespans, it may not be possible to predict how much money retirees need in the bank. Life expectancy was an average 78.6 years in 2017, up from 78.1 in 2007 and 76.5 in 1997, according to the most recent statistics by the U.S. Department of Health and Human Services

“If you just sit on the sidelines and don’t get invested for the future, with the longevity that people are having because of better health care, it’s not going to be easy to be able to retire and live those extra 10-14 years,” he said. Last year, “there was so much cash on the sidelines earning very, very little. And it [the risk of recession] scared a lot of people last year, and they stayed in cash, about 38% of investors are in cash.”

Blackrock's President, Rob Kapito, stands on the floor of the New York Stock Exchange (NYSE) in New York, U.S. May 31, 2019. REUTERS/Lucas Jackson

Demand for stocks will continue to rise as life expectancy rises, said Kapito, adding that living longer is a positive driving force for stock market growth. 

“I think right now there is more demand than there are assets, which tells me that the stock markets across the globe will continue to rise,” said Kapito.

Demand driven by rising life expectancy, combined with low unemployment and global growth, point to a positive outlook for the economy, he said.

“I’m leaving this conference even more optimistic than I was last year…,” said Kapito. ”It’s just that people are having a problem, because of so many other social and political issues, of trying to feel optimistic. We want to keep investors focused on the prize. It’s about creating alpha, it’s about returns. So I think I’m very optimistic and companies have told me they’re very optimistic as well, they’re just a little nervous about pushing it too far.” 

Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter

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