AARP Bulletin - January 2011

In the Know ; Opinion
Key concerns: health care costs and secure retirement
Your Priorities Are My Agenda By Sen. Herb Kohl
There are a few things that have not changed in the 65 years since the first baby boomers were born: Americans
still hold a deep desire to retire with dignity,
which means maintaining their quality of life
in terms of both finances and health.
While these priorities remain, much has
changed, particularly in recent years. No doubt
you have taken a look at your 401(k) statement
or health care bills recently and can see some
of the changes for yourself. Over 30 percent of
Americans who are on the verge of retirement
and have been socking away savings for 20 years
or more have not seen their 401(k)s recover fully
from the economic downturn.
This at a time when more and more people
are relying on 401(k) accounts as a primary re-
tirement savings vehicle. In contrast
to the defined benefit pensions many
Americans used to receive, our current retirement system
has transferred the responsibility for retirement savings
and risk from employer to employee. This means that in-
dividuals must make several proactive decisions, includ-
ing the decision to save, how much to save, how to invest
and how to make their savings last through retirement.
But even those lucky enough to have earned a pension are
vulnerable. In Wisconsin, I have seen the devastation of
plants closing and pension plans crumbling. Now more than ever, it is
vital that we shore up the nation’s system of individual retirement sav-
ings. Last year, the Senate Special Committee on Aging ensured that
401(k) account fees be clearly disclosed to consumers on quarterly
statements. Before that, investment firms were not required to dis-
close the fees workers were paying. Here’s the impact: An additional
1 percent fee can reduce a worker’s 401(k) balance by as much as 20
COVER
STORY
@
BOOMERS
65
percent over a two-decade period, according to Government
Accountability O;ce calculations.
We will also work to close 401(k) loopholes and will
tackle individual retirement accounts, which make up the
largest portion of the retirement market, and explore ways
to make it easier for small businesses to o;er retirement
savings plans to their employees.
The committee’s priorities for health care and long-
term care likely mirror your own. We understand that
Americans want to remain independent, and in their own
homes, as long as possible. Seniors
want access to quality health care,
and they do not want the costs to
force them into financial ruin. We
will continue our aggressive e;orts
to reduce prescription drug costs and
increase access to a;ordable gener-
ics. We will address the outrageous
rate hikes that consumers have expe-
rienced at the hands of both health
insurance and long-term care insur-
ance companies. And we will be bold
when necessary, as we were when we
held up confirmation of the chief of
the Drug Enforcement Administration to pressure the agency
into allowing readier access to painkilling medicine for nursing
home residents.
As the first boomers hit 65 this year, the Aging Committee is ready.
Your priorities are our agenda. Despite all the changes taking place
around us, our mandate remains the same: to help Americans achieve
the secure, healthy and comfortable retirement they deserve. ;
Our mandate
is to help
Americans
achieve
the secure,
healthy and
comfortable
retirement
they deserve.
Herb Kohl is a Democratic senator from Wisconsin and chairman
of the Senate Special Committee on Aging.
BOOK EXCERPT
; Practical Wisdom By Barry Schwartz and Kenneth Sharpe
We do need rules to guide
and govern the behavior of
people who are not wise:
one reason we suffered
the recent financial crisis was because
weak and loosely enforced rules and reg-
ulations allowed shrewd money-making
schemes like derivatives to run amok. But
tighter rules and regulations, however nec-
essary, are pale substitutes for wisdom …
At the same time, rules alone guarantee
mediocrity—forcing the truly motivated
to become outlaws, rule-breakers pursu-
ing a kind of guerrilla war to achieve ex-
cellence—and risk squeezing out wisdom.

—Adapted from Practical Wisdom: The
Right Way to Do the Right Thing by Barry
Schwartz and Kenneth Sharpe, by arrange-
ment with Riverhead Books, a member of
Penguin Group (USA).