How Does Your Brain Score? Take the Staying Sharp Brain Health Assessment

Testimony Before the Senate Special Committee on Aging on Managing Retirement Assets

AARP has long recognized the importance of a guaranteed stream of income throughout retirement. We have and will continue to support proposals that would encourage individuals to select an annuity rather than to cash out a lump sum distribution from either a defined benefit or a defined contribution plan. We also favor new incentives that would encourage 401(k) sponsors to automatically provide plan participants with an annuity option.

We are also carefully considering and evaluating the potential impact of the proposals to provide new tax incentives to encourage individuals to use annuities to insure against longevity risk.

AARP has been concerned with the high fees, complexities, and marketing practices associated with certain annuity products. We want to work with others to foster products and incentives that will help individuals manage their assets and ensure their financial security in retirement. In addition, we want to assist our members to become wise consumers.

C. Personal Savings and Investments. While the 50+ age group is still the country's wealthiest cohort, with higher rates of home ownership and savings than younger groups, many of them are ill prepared for retirement. Nationwide personal savings are at an all time low, and many of the retirement savers age 50 and older have accumulated far less than they will need for a retirement that could be three decades or longer. And, a mere six percent of individuals contribute to an IRA or a Roth IRA.

Unfortunately, many in the age 50 and older group are going deeper into personal debt and also will not own their homes free and clear as their parents did when they retired. In the 1990's, the median amount of money older people owed doubled in every income bracket, and the burden is highest among individuals with low-incomes. The circumstances of the age 55-64 cohort of pre-retirees are especially worrisome because, on the one hand, they carry the most debt and on the other, they are nearing traditional retirement age and do not have the resources to fully retire. Unfortunately, many in this age group may not know they cannot afford to retire until it is too late.

In order to encourage responsible savings and investment among those 50 and over, AARP has established five principles to guide these choices. If these time-tested investment principles are followed, a strong foundation of financial security will be established. The five principles are:

  • Keep fees low
  • Use index funds
  • Diversify investments
  • Rebalance to stay on track
  • Keep it simple

    Keep Fees Low

    Fees and expenses limit returns over time, which, in turn, reduce the amount of retirement savings accumulated. Since fees occur in all types of financial products—mutual funds, individual stocks and bonds, insurance vehicles, and mortgages—individuals should scrutinize financial documents for clearly stated, as well as hidden, fees.

    When it comes to mutual funds, it is important to know the difference between "load" and "no load" products. In order to maximize asset accumulation, look for no-load funds with expense ratios of less than 1 percent. Similarly, when it comes to trading individual stocks or bonds, find ways to keep costs low.

    Here are examples of how fees can impact performance:

Search Press Center


If you are an AARP member and not with the press, call 1-888-OUR-AARP or email


For media inquiries, please contact the AARP Media Relations Office at (202) 434-2560 or


Facebook: AARP Media Relations

Twitter: @aarpmedia

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.


Member Benefits AT&T Wireless Cell Phone

Members save 10% on the monthly service charge of qualified AT&T wireless plans.

Member Benefit AARP Regal 2

Members pay $9.50 for Regal ePremiere Tickets purchased online.

Walgreens 1 discount membership aarp

Members earn points on select Walgreens-brand health and wellness products.

Member Benefits

Join or renew today! Members receive exclusive member benefits & affect social change.