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The State of 50+ America

William D. Novelli, AARP Executive Director and CEO

Those 50 and older in the U.S. are—in a word—vulnerable. And, by most indications, that vulnerability is increasing. Like everyone else, for those 50+, homeland security is on everyone's mind.

But, 50+ Americans increasingly are also threatened by the increasing vulnerability to their health security and their economic security, the effect this has on the day-to-day decisions that impact their lives and the long-term effect on their quality of life.

A recent study by Harris Interactive found that higher out-of-pocket drug costs are causing massive non-compliance in the use of prescription drugs. Millions of Americans do not ask doctors for the prescriptions they need, do not fill the prescriptions they are given, don't take their full doses and take their drugs less often than they should. Moreover, the higher people's out-of-pocket costs for drugs, the more likely they are to be non-compliant.

We hear from our members every day on this. It is a huge and persistent problem that is getting worse. It affects not just low-income seniors, but middle-class people on fixed incomes, as well.

There is really only one way to cope with this.

America needs to have affordable drug coverage in Medicare, along with cost containment so that a Medicare benefit can be sustained.

In the current economic situation, there is also a major problem with Medicaid and the states' ability to sustain these programs. Forty states currently face Medicaid shortfalls driven by unsustainable drug costs.

And American businesses large and small are feeling the squeeze of high drug costs. Many are dropping drug coverage or requiring employees and retirees to pay significantly more.

Another part of the vulnerability of older Americas is that these are increasingly difficult times for people planning retirement. In addition to the high costs of prescription drugs, shrinking retiree pensions and health coverage are adding to their burden. Today, roughly half of all American workers do not have any type of pension benefit, and many lack the savings needed for a secure retirement.

For those fortunate enough to have a pension benefit, the declining stock market has decreased the value of their retirement funds and other investments.

Recently, we did a survey of stockowners between 50 and 70 years old and found that 80 percent reported losing money over the past two years in individual stocks, mutual funds, or other stock investment accounts, including 401(k) plans. One in four lost over 25 percent.

And even those with traditional guaranteed plans have seen an erosion in value as a result of the trend toward cash-balance plans. Among those still working, one in every five said they have had to postpone retirement as a result of their losses. And many people have gone back to work.

These trends again remind us that today it takes four pillars to build a secure retirement: Social Security, savings and pensions combined, continued earnings from work and adequate health insurance. They all work together to determine the size and value of your retirement nest egg.

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