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Policy Fundamentals For Financial Security

For people to enjoy economic security as they age, they need a strong Social Security system and better opportunities to build savings throughout their lives and to work as long as they desire and are able. Freedom from discrimination and a strong social safety net are essential.

Many Americans are approaching their later years without the financial resources they need to live securely. These populations include historically disadvantaged groups, as well as many others who struggle to pay the bills and have little saved for emergencies. Too many people lack sufficient nest eggs for retirement. A strong Social Security system, better access to workplace retirement plans and more incentives to promote saving all play a role in helping individuals live out their lives in financial security. In addition, older adults need to have the opportunity to work for as long as they need to or desire. Government and the private sector can each take actions to encourage financial resilience for all.

Social Security

AARP is committed to preserving a Social Security program that retains its essential role and character for future generations. Social Security’s long-term finances will have to be addressed, but in a manner that keeps it strong and even more effective for families in the 21st century. Specifically, Social Security should be guided by the following principles:

  • Social Security should continue to provide a stable foundation for retirement income. Social Security is the primary source of retirement income for most Americans. It plays a crucial role in reducing poverty among older adults and enabling retirees to cover basic expenses. Benefits that are guaranteed, adjusted every year for inflation and last for a worker’s lifetime are among the essential features of Social Security.

  • Social Security should maintain its role in providing crucial protections for families. Social Security also includes a life insurance program, providing income to spouses and children if a worker dies. It also protects individuals who no longer can work due to severe illness or disability.

  • Any reforms to Social Security should preserve meaningful benefits for future generations. Given Social Security’s critical importance, its long-term finances do need to be addressed, but benefit levels must remain adequate and reflect economic and demographic changes of the last 80 years. Reforms should take into account the needs of those most reliant on Social Security and those who cannot postpone retirement. All covered workers should contribute equitably to the program and receive benefits.

  • Proposals to replace Social Security with private accounts threaten the program’s income-insurance and family-protection features. Social Security’s basic floor of income security for future generations should not be replaced by the hypothetical and uncertain returns from private accounts. Savings accounts can be exhausted, but Social Security benefits last a lifetime.


Millions of Americans have little or nothing saved for the future.  A variety of measures can bolster savings and help ensure that more Americans can bounce back from modest financial setbacks — a major barrier to long-term savings — and that older adults do not outlive their retirement money.

  • Everyone should have access to savings vehicles that promote financial security and stability throughout their working lives. People need savings throughout their lifetimes for both shorter-term needs, such as dealing with financial emergencies, and for long-term priorities like retirement. For both types of savings, they should have the ability to use low-fee accounts and should be able to choose among a variety of investment options for long-term savings accounts. Savers should also get clear, unbiased information and advice about their choices.

  • Workers should be able to save for retirement in the workplace. Only about half of U.S. workers — and even fewer among those from historically disadvantaged racial and ethnic groups — have access to employer-sponsored retirement plans. Policymakers can implement policies that make it easier for more employers to offer savings plans. Employers can structure simple, easy-to-understand savings plans that ensure more participation and higher savings, such as by automatically enrolling new employees in savings accounts and deducting contributions to savings accounts directly from workers’ paychecks. Upon retirement, savers should be able to receive their benefits as some form of guaranteed lifetime income stream rather than as a lump sum.

  • Policymakers should make effective savings incentives a priority. Government policies can both encourage employers to establish well-designed savings programs and provide incentives for people to participate in savings programs and increase the amount they save. Tax incentives and other mechanisms to subsidize savings particularly should help people with low and moderate incomes as well as savers with volatile incomes, limited access to financial institutions, and differing financial goals.

  • Incentives, protections and access should extend beyond traditional employees. Self-employed individuals, independent contractors, temporary workers and others who work outside a traditional employment relationship all should have access to effectively structured saving plans, as well as tax incentives that encourage them to participate. In addition, savings programs should be designed so that accounts can be easily moved and accumulations preserved when people change jobs.

  • Employers should fulfill their pension promises. Companies that still offer defined-benefit pensions should continue to offer them, as these plans provide reliable retirement income. The plans must be adequately funded, and regulators should supervise them and enforce consumer protections. Investment and longevity risks should not be shifted to beneficiaries. 


People should have the tools they need to navigate the risks and opportunities of today’s workplace. All barriers to employment opportunity for older adults should be eliminated. Individuals age 65-plus may have some distinct needs, but support and protections are required for everyone.

  • Workers must be protected from discrimination in all aspects of employment. Age-related job discrimination persists despite laws prohibiting it. Far too often, employers exclude older applicants from recruiting activities, refuse to hire or promote older workers, target them in layoffs, curtail their benefits, and limit their training opportunities and job responsibilities. Further, digital hiring and recruitment introduces new avenues for bias. Policymakers should ensure that age discrimination claims are treated on par with other forms of discrimination.

  • Employers should provide workers with flexible work arrangements and paid time off. Flexible work arrangements, such as alternative schedules and telecommuting, can make it possible for people with health problems or disabilities and working caregivers to remain on the job. Job-protected leave, such as paid time off for family and medical leave, helps people balance the demands of work with the need to take care of themselves and their family members.

  • All workers, whether in traditional or gig-economy jobs, need protections and benefits. The trend of outsourcing job tasks to independent contractors and temporary workers has left growing numbers without the traditional rights and benefits that go with a job. Such elusive, yet basic, protections include the minimum wage, paid overtime, occupational health and safety standards, civil rights and the right to organize. Policymakers should consider strategies for how to extend current protections to them.

  • Workers deserve assistance preparing for and weathering labor market changes and job displacement. Lifelong training and retraining opportunities are essential, particularly as people start to work longer. Programs for people who become unemployed can be strengthened. Unemployment-insurance benefits do not reach enough who need them.

Access For People With Low Incomes

Even in the United States, millions of people have serious, unmet basic needs. Struggling families and individuals need programs that help them pay for the necessities of life. Such benefits should be efficiently administered and available and accessible to all those who need them.

  • A strong safety net is important to help people escape poverty. Sometimes people need financial help to pay for essentials like food, housing, transportation and health care, whether it’s to get through a sudden crisis or because they face chronic financial challenges. Well-run safety net programs fill that vital role. Program applications should be simple to use, language-appropriate, and culturally competent. They should also be better coordinated to ensure both ease of access and personal dignity for those who need support.

  • Food insecurity has a significant impact on the health and well-being of older Americans. Older adults who lack the resources to cover their basic food needs are more likely to die of heart attacks, suffer depression, and have limited ability to live independently. Policymakers should dedicate enough money to food and nutrition assistance programs to fully serve those in need.

  • Policymakers should ensure access to essential programs and services for people with low incomes. People have a right to basic and necessary services such as utilities, telephones, digital communications, financial products and services, housing and transportation. High-quality health care and long-term services and supports must be widely available. These services and programs also should be affordable, safe, reliable and culturally competent.

Budget and Taxation

Government budgets and the tax system reflect policy priorities about how to allocate scarce resources and how to raise the money to pay for those priorities. Thus, they affect all members of society. Given the far-reaching consequences of these decisions, it is important that budget processes be fair and credible and that the tax system generate revenue equitably.

  • The budget process must be transparent and prudent. Transparency and prudence ensure accountability and help government attain public support. Proper accountability and oversight of government spending requires a transparent budget process negotiated by elected officials. Budget processes should use reasonable assumptions, consider straightforward analyses of impacts, and allow enough flexibility to respond to changing circumstances.

  • Policymakers need to raise revenue in a fair manner. Revenue should be raised equitably among income groups and generations. It should also consider people’s ability to pay. People with comparable incomes should be taxed at comparable rates, and people with lower incomes should pay a lower share of their income in taxes and fees than do people with higher incomes.

  • The tax system must produce sufficient revenue to pay for important national, state and local priorities. Revenue should be adequate to fund and sustain government spending and meet public needs. Government officials should consider the medium- and long-term effects of budget policies. If deficit spending occurs, it should be held to a manageable level to ensure fiscal stability and preserve economic growth.

  • Tax reforms should move toward simplification, not increased complexity. Taxes should be simpler for taxpayers to understand and comply with, and as easy as possible to administer.