2006 ANNUAL REPORT · Security with my passion for quality, affordable health care for all. This is the focus of my two-year tenure as president. AARP believes ... In other book-publishing

2006 ANNUAL REPORT

INSIDE

Letter from the President 2Letter from the Chief Executive Officer 4Highlights of 2006 6Health Care 9Financial Security 13Elections 14Livable Communities 16Delivering Value to Members 19Global Aging 21Looking Ahead 22AARP Board of Directors 24AARP Executive Team 30Summary of 2006 AARPConsolidated Financial Statements 31

Your Champion for Change

The winds of changeblew through AARP andthe nation in 2006 —including a sweeping new emphasis on meeting

and exceeding our members’ expectations… the

start-up of a Medicare benefit that changed

the way people obtain and pay for their pre-

scription drugs… growing interest among 50+

Americans for a bipartisan approach to health

care and long-term financial security… and a

fresh new look for AARP for the coming year.

In the face of constantly changing realities,

our challenge is the same — to engage and

deliver to our members what they want, need

and expect — financial well-being, health,

ways of contributing to society, a role in

their community and the opportunity to

fully enjoy life.

Letter from Erik D. Olsen

It was a great honor for me to become AARP’s

president in May 2006. I succeeded Marie

Smith, whom I believe was one of the greatest

presidents—and one of the greatest people—

to have served AARP in its 48-year history.

With Marie’s 25 years of experience at the

Social Security Administration, she was the

right person to help educate America that

carving private accounts out of Social Security

would weaken the system. Now we need to

keep working hard to finish the job by strength-

ening Social Security for future generations.

I hope to match Marie’s passion for Social

Security with my passion for quality, affordable

health care for all. This is the focus of my

two-year tenure as president. AARP believes

that every American should have access to

affordable, quality health care, including

prescription drug coverage and a range of

long-term care choices. And we are working

hard to make it happen.

We must look not only to the best minds in

this country to inform us about how to heal

our fractured health care system, but also to

other nations. During a Leadership Study in

June 2006, the Board of Directors and AARP

executive leadership spent an intense week

learning how several European countries tackle

many of the same health challenges we face.

Their practical approaches to health informa-

tion technology, prescription drug pricing,

community-based care and more will help

us develop unique American solutions to

vexing health care challenges.

We made great strides on many health care

fronts this year. AARP played a leadership role

in shaping innovative health care reforms

in several states. We helped people take

charge of their medicines and their health.

With guidance from leading neurologists,

we promoted brain health. And by promoting

clear information and fostering fellowship,

we encouraged people to get off the couch

to enjoy some exercise.

e r i k o l s e nAARP President 2006-2008

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2AARP 2006 Annual Report

We also made significant progress in other areas

important to our members and society at large.

Our outreach to housing and transportation

planners helped to foster greater understanding

of the practical steps that can and should be

taken to make individual homes and entire

communities more hospitable to people at all

stages of life.

In 2006, we also focused on trying to give each

AARP member a “wow” experience. For some,

it meant connecting them with a meaningful

volunteer opportunity in their community.

For others, it was helping them shift gears in

their career or to invest wisely. Simple pleasures

like brain teasers on our website or rocking

out to Elton John during the lively Life@50+

event in Anaheim were also part of the member

value mix.

We’re working hard to achieve our goal of

50 million members by 2011, when the first

boomers turn 65. Yet even with our size and

reach, we cannot change society by ourselves.

So, we continue to work vigorously with

business, labor, consumer groups and other

nonprofit organizations to bring about positive

social change and create a society where all

people can age with dignity and purpose.

By harnessing the collective wisdom, energy

and patriotism of our members, AARP and its

members are doing amazing things to make

life better for today’s 50+ population and

generations that follow. I’m proud to serve

as AARP’s national president.

AARP and its members are doingamazing things to make life betterfor today’s 50+ population and generations that follow.

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Letter from Bill Novelli

2006 was a very successful year in our quest to make life better for people as theyage, certainly one of the most successful in our 48-year history. We did not have any great policy battles to win or lose, although the reauthorization of the OlderAmericans Act, the Pension Protection Act, state health care reform in Vermont and our defeat of TABOR legislation in several states were important steps forward.The success of 2006 was mostly due to our growth and substantial investment in the future, and in building AARP as a strong national and state institution that serves its members and the country. While there are huge challenges ahead,we look back on 2006 with a tremendous sense of accomplishment.

In the foreword to my book, 50+: Igniting a

Revolution to Reinvent America, published in

October 2006, AOL founder Steve Case wrote,

“Americans deserve a revolution. With people

living longer, and the first of the 78 million

baby boomer generation turning 60 this year,

America is on the brink of another wave of

disruptive change. Both as individuals and

as a nation, we need to be ready to take

advantage of the emerging opportunities

that will arise from this change.”

We did that in 2006 by championing the

Medicare prescription drug benefit and helping

people make good choices about enrollment.

Our support and hard work for the Medicare

Modernization Act is being realized, as some

80 percent of enrollees express satisfaction,

and the average person is saving about

$1,200 a year.

We introduced new savings products and

services for our members through AARP

Financial, expanded our Driver Safety and

Tax-Aide programs, and made progress

on several livable communities projects,

including the Gulf Coast where AARP

volunteers and staff are on the ground

helping to rebuild homes and communities.

In the landmark 2006 elections we broke new

ground with our biggest and best-ever voter

education effort, with a national advertising

and grassroots campaign called “Don’t Vote.”

Fifty-two percent of all voters last November

were 50 and older, and 25 percent were

AARP members.

In 2006, we created and served a larger, more

diverse membership. We ended the year at

just under 38 million members, of whom

about 2,250,000 are African American and

1,100,000 are Hispanic. We are on our way

to achieving our goal of having AARP reflect

the face of America.

b i l l n o v e l l iChief Executive Officer, AARP

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We made good progress in our Member

Relationship Management — knowing every

member so well that we can tailor our

information, products and services to meet

specific needs and interests, and provide

a more personal and relevant experience

for each one of them.

We began to transform our website and

revitalized our brand around five basic

member needs: health, finances, connecting,

giving and enjoying.

We made substantial progress in promoting

older workers by creating new partnerships

with employer groups, expanding resources

for the business community and continuing

to build credibility (72 percent of employers

now view AARP as a resource on aging work-

force issues).

For the first time, we surpassed one billion

dollars in revenue. This is important not

in and of itself, but because it enables us

to invest in service to our members, to our

country and beyond, as our international

work moves forward.

At AARP, we are preparing ourselves, our

members and the nation for big changes

ahead and helping to lead that change —

transforming the health care system to ensure

that all Americans have access to affordable,

quality health care, helping them attain life-

long financial security, and creating livable

communities so people can live independently

as long as possible. We look forward with

energy and purpose to the year ahead.

We are preparingourselves, ourmembers and the nation for bigchanges aheadand helping tolead that change.

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2006 was a pivotal year in AARP’s quest to make

life better for people as they age. We continued

to lead positive social change and provide greater

value to our members, and we also turned inward

to undertake important initiatives to prepare for

the huge challenges ahead.

of 2006Highlights

General Colin L. Powell,USA (Ret.), received the2006 AARP Andrus Award,our highest honor, in recognition of his significantcontributions to society.

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Some highlights:

� Through advocacy in states and Congress,

and an issue-focused voter education effort,

AARP was a catalyst for positive changes.

This included passage by Congress of a

pension reform law and extension of the

Older Americans Act, as well as state health

reforms and consumer protections.

� The Medicare Part D prescription drug

program shifted from being a promising

benefit on paper to a reality — benefiting

24 million people by year’s end. We are

particularly proud to have helped promote

Medicare’s low-income subsidy, without

which millions of beneficiaries could not

have afforded their medicines.

� Our prestigious Andrus Award was

presented to the former Secretary

of State, General Colin Powell.

� Our charitable and philanthropic arm

— the AARP Foundation — strengthened

its efforts to lead positive social change,

with an emphasis on those at social and

economic risk. It established the Women’s

Leadership Circle and successfully

competed for the Senior Community

Service Employment Program grant from

the U.S. Department of Labor.

� We ended 2006 with 37,716,904 members

— exceeding our goal.

� AARP’s brand was revitalized around the

need for health, financial well-being, con-

tributing (through volunteerism, wisdom

and donations), community and the need

to play. As part of this effort, we refreshed

our logo and affirmed AARP as a champion

for our members and America.

� All of these achievements were made possible

by AARP’s talented staff, often in cooperation

with volunteers. Through our enterprise-wide

People Strategy, we continued to make AARP

an even better place to work, with employees

more engaged and committed to AARP’s

success than ever before.

In October 2006,AARP CEO BillNovelli publishedhis first book,50+: Igniting aRevolution toReinvent America,to advance AARP’ssocial impactwork. The book is a call to arms for50+ Americans tobecome involvedin social change.All proceedsfrom the book,which was writ-ten with BoeWorkman, go tothe AARPFoundation.

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new booksAmong the titles published byAARP Books in 2006, two inparticular—The AARP Guide to Pills and Scam-Proof YourLife—were jam-packed withvital consumer information.The pill guide, to be published

in paperback early in 2007, featuredessential tips on managing medications fromHarvard-trained doctors Jerry Avorn and BillThomas, as well as consumer advocate KatharineGreider. The scam-busting book, authored by

the AARP Bulletin’s own “ScamAlert” columnist (and award-winning investigative reporter)Sid Kirchheimer, landed theauthor on the CBS Early Show,NBC’s Today Show and in thepages of The New York Timesand The Washington Post.

In other book-publishing firsts, For My Grandchild:A Grandmother’s Gift of Memory—designed tocapture the rich and varied life experiences of today’s active grandmothers—sold 150,000copies following its November 2005 debut. The year also saw AARP fan the flames of thelatest puzzle phenomenon, unveiling Sudoku to Exercise Your Mind in collaboration with our partner Sterling Publishing, Inc.

Titles to watch for in the near future includeLiving with Heart Disease; Living with Diabetes;The AARP Crash Course in Creating RetirementIncome; Dr. Barry Gordon’s Memory Workshop;The AARP Crash Course in Recareering; For MyGrandchild: A Grandfather’s Gift of Memory;and The Power of Experience: 50 Great WritersWrite About Life After 50.

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For too many of our fellow citizens, the American dream is eroding

along with their health care and financial security. As your champion

for change, AARP led the way in 2006 with practical, proactive efforts

and solid results that will help people of all ages achieve the quality

of life and peace of mind they deserve.

Health CarePrescription DrugsMedicare’s long-awaited prescription drug

benefit, known as Part D, took effect in 2006.

AARP worked hard to get it into law back in

2003, and we succeeded. In 2006, we moved

into high gear with the comprehensive,

nationwide campaign that we’d launched

in late 2005 to educate all Medicare

beneficiaries about the new benefit.

All 53 state offices engaged in intensive

outreach to inform and enroll benefici-

aries. The AARP Bulletin, AARP The

Magazine and Segunda Juventud

provided timely information. Trained

volunteers conducted external

promotions and directed tens of thousands of

potential beneficiaries—particularly targeting

those in the African American, Hispanic, Native

American and Asian/Pacific communities—

to places where they could receive direct

enrollment assistance.

Particular emphasis was placed on informing

people with low incomes about the substantial

financial assistance available to them. AARP’s

advocacy at the federal level resulted in

a longer enrollment period and no late-

enrollment penalties for those eligible for

the Part D low-income subsidy.

At the same time, we made available a plan

—AARP Medicare Rx— through our endorsed

provider, UnitedHealth Group. This product,

based on our understanding of the needs of

our members and all Medicare beneficiaries,

became the number one choice of Medicare

beneficiaries in the U.S.

By the end of the year,24 million people werereceiving prescription drug coverage through Part D, and public opinion surveys showed overwhelming satisfaction.

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By the end of the year, 24 million people were

receiving prescription drug coverage through

Part D, and public opinion surveys showed

overwhelming satisfaction.

We also continued the fight to make prescription

drugs more affordable. We helped persuade

Congress to give additional funds to the Food

and Drug Administration to reduce its backlog

of approvals, and we supported important

reforms in 21 states. And we put AARP's Your

Medicines and You materials (in English and

Spanish) on display in 5,400 Walgreens stores

nationwide.

State Health Reform When Erik Olsen became AARP’s president in

May, he gave a rousing speech about the need

for health care reform. While events progressed

slowly in Washington, DC, many states were

actively engaged in health care reform projects.

While many states laid the groundwork for

action next year, Vermont and Massachusetts

passed significant health care reform measures.

What riveted the public’s attention was that

these laws, although very different, had

strong bipartisan support. Both were passed

by Democratic-controlled legislatures and

signed into law by Republican governors.

In Vermont, AARP played a key role in building

support for the legislation, which develops a

voluntary plan that will be offered to uninsured

residents by private insurers. The plan will have

standard benefits and a standard fee structure.

Vermont will also promote preventive care by

giving financial incentives, such as free office

visits or lower co-payments, to people who

seek help in managing diabetes, heart disease

and other chronic conditions.

AARP will work to build on this and other

victories to encourage other states to act on

health care reform next year. At the federal

level, AARP will continue urging Congress

to find bipartisan consensus on legislation

to assure better and more affordable health

care coverage.

Francis Osinski and his father, MarcellusKuhn, 74, provide an excellent example of familycaregiving and why New Jersey’s new AARP-backed Independence, Dignity and Choice inLong-Term Care Act is so important.

When Kuhn needed long-term care because of a leg injury and other health problems, hebecame one of the many New Jersey residentsforced into a nursing home under the state’sMedicaid funding system. Although his son and his wife wanted to take care of him, fundingwas not available for necessary home-careservices, so Kuhn entered a nursing home,where he said he “felt like a number.”

Thanks in large part to the hard work and lobbying of AARP volunteers and staff, thestate’s new long-term care law changed forthe better, by increasing funding for home-and community-based care.

A relieved Fran Osinski said, “My family and I are so grateful to be able to have my fatherlive at home with us.”

Long-Term Care Most people prefer to stay in their homes or

communities when they are unable to care

for themselves. But finding or affording such

care has been a frustrating challenge because

our nation has no rational, national way to

cover its citizens’ long-term care needs.

As a result, too many Americans who need

help with basic daily functions such as bathing

and dressing end up in costly nursing homes.

AARP made improvements in long-term care

a priority in 48 states, and 20 states reported

legislative victories. As a result, millions of

people will get better choices of care, and

many state governments will save money.

In Tennessee, for example, AARP’s diligent

two-year campaign culminated with an April

rally of more than 1,200 “Choices for Care”

supporters who gathered at the statehouse

to deliver 18,000 postcards to the governor.

By the end of May, the state had added new

services such as adult day care and personal

attendant care that will enable thousands to

avoid or delay placement in a nursing home.

v o i c e o f t h e m e m b e r

New Jersey Gov. Jon Corzine (right)shakes hands with

family caregiverFrancis Osinski

after signing groundbreaking long-term care

legislation as AARPrepresentatives

and elected officials look on.

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We put up a stiff fight in 2006 against thosewho try to rip off others’hard-earned money.

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With many employers abandoning traditional

pension plans, many Americans have accepted

greater responsibility for their financial future.

Yet many are not saving enough, or find invest-

ing to be overwhelming and complex. AARP

deployed considerable resources in 2006 to help

improve our members’ financial well-being and

make saving for retirement easier.

Our advocacy in Congress helped lead to

passage of the Pension Protection Act of 2006.

While more needs to be done, this new law will

help boost savings by encouraging employers

to automatically enroll workers in their 401(k)

plan. It also improves the saver’s credit, which

helps low- and moderate-income workers save

for retirement.

Meanwhile, the AARP Foundation reached

a new milestone: volunteers with its Tax-Aide

program completed tax returns free of charge

for more than two million low- and moderate-

income clients in 2006.

Workforce Initiatives Mature workers make great employees, and

thanks to AARP’s efforts, an increasing number

of employers value their experience and abilities.

In 2006, six more employers, including Staples

and Toys R Us/Babies R Us, committed to

recruiting, hiring and retaining mature workers

by joining AARP’s National Employer Team.

The sixth annual AARP Best Employers for

Workers Over 50 Program recognized 50 employ-

ers who are ahead of the curve because they

hire and keep good, skilled workers with a life-

time of experience. The 122 organizations that

applied were evaluated on the basis of their

age-neutral programs, policies, and practices

for workers age 50 and older.

As an employer, AARP is walking the talk by

modeling innovative practices that support

mature workers. In 2006, we introduced: a

phased-retirement that provides our older

workers alternatives to full retirement that may

enable them to continue working for AARP as

they ease into retirement; the Renewal program,

which offers eligible, long-term employees four

weeks away from work to disconnect, refresh

and replenish their inner reserves; and a

revitalized menu of flexible work options.

Consumer Protection We put up a stiff fight in 2006 against those

who try to rip off others’ hard-earned money.

States launched education campaigns to

protect consumers from investment fraud

and other scams. Seventeen states adopted

AARP-backed legislative protections against

identity theft. After six long years, the Ohio

General Assembly passed the AARP-backed

Ohio Homebuyers’ Protection Act, a strong

anti-predatory lending bill that will tighten

safeguards for consumers and ensure

increased protection from unscrupulous

lending practices.

AARP also achieved a number of victories to

keep utility rates reasonable, saving consumers

more than $700 million in 15 states and adding

$1 billion to the federal program that helps

low-income individuals afford home-heating.

Financial Security

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ElectionsVoters issued a loud and clear message

when they went to the polls in November 2006.

Through their ballots, they emphasized that

elected officials from all parties should stop

bickering and work together on Social Security,

prescription drugs, health care reform and

long-term care.

For years, voters have told us through surveys

that they would prefer to elect a candidate that

agrees with them on key issues than just some-

one with a good image. But it’s difficult for busy

people to research where candidates stand on

the issues.

That’s why AARP launched a catchy advertising

campaign in 2006, dubbed “Don’t Vote.” The

attention-grabbing television and print ads

told voters, “Don’t vote until you know where

the candidates stand on the issues.”

The ads had a little fun with the tendency

of some candidates to dance around the issues

while making sure they look sharp for the

photo opportunities. Informed voters know

when they’re being given a song and dance.

A distinctive website—www.dontvote.com—

provided one convenient destination where

voters could learn where candidates stood on

important issues. For example, candidates

explained their positions on the long-term

strength of Social Security and making health

care affordable for all Americans.

During the six weeks leading up to Election Day,

AARP issued a series of public opinion surveys

that reflected the pulse of boomer and mature

voters. Surveys found that most (72 percent)

strongly oppose using Social Security taxes to

fund private accounts; support national action

on health care reform; and expect elected

officials to protect them from identity theft

and other consumer frauds.

We placed particular emphasis on six targeted

“Frontrunner” races that featured open seats

(with no incumbent). We learned how targeting

additional resources and using a mix of voter

education techniques can help inform and

motivate voters. These lessons will enhance

our efforts during the 2008 election cycle.

AARP’s Frontrunner efforts often made the

difference between issue-focused campaigns

and months of personality-only politics.

Elected officials are well aware that older

voters are the most consistent voters, and

that AARP members vote even more regularly.

Politicians know they must pay attention to

issues that matter most to older voters and

their families, such as long-term financial

security and health care.

52% of those

who cast ballots in

the 2006 mid-term

elections were age 50+

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AARP helped members in four states to see

the “taxpayer of bill of rights” (TABOR) as the

wolf in sheep’s clothing that it was. All four

states defeated TABOR ballot initiatives, which

would have straight-jacketed public spending

on vital services. And AARP members’ votes

made the difference in dozens of other state

ballot items.

Through it all, AARP remained fiercely

nonpartisan. We do not endorse or contribute

to any candidates or political parties.

We remain committed to holding

Congress accountable. Next year, we

will publish votes by members of the

House and Senate on key issues, and

inform our members of the results

of those votes via our publications

and website.

It’s just another way that AARP can

promote positive social change and

use its considerable power to be your trusted

champion for change.

One ofevery fourvoters was an AARPmember, accordingto exit polls.

Volunteers, such as these three AARP membersfrom Dubuque, Iowa, spent hours sending out mailings, filling requests for voters’ guides andaccompanying the Don’t Vote van to variousevents. “Volunteering on AARP’s electionsefforts was a hoot. Members are comfortabletalking about the issues, asking questionsand having conversations about commonconcerns,” said Daryl Tetterton, at left,with his wife Mary Lursen (center) and voter Joan Knowles.

Elected officials arewell aware that oldervoters are the mostconsistent voters,and that AARPmembers vote evenmore regularly.

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AARP is leading the nation in enhancing the

independence of those 50+ by promoting

“livable communities”—places with affordable

and appropriate housing, mobility options and

supportive community features and services.

The Driver Safety Program launched an online

version of its course, with great success. By the

end of the year, nearly 15,000 people had

completed it—nearly double the original goal

of 8,000 participants. We also began training

state staff and volunteers to represent the 50+

population before local decision-makers on

transportation funding. Over half the states

participated in regional workshops or training

sessions titled “The Role of Transportation

Planning in Creating Livable Communities.”

LivableCommunities

AARP remained a positive influence on

teaching remodelers how to modify homes

for safety and accessibility by reviewing

curriculum for, and participating on the board

of, the National Association of Home Builders’

Certified Aging-in-Place Specialist program.

More than 2,600 volunteers helped to rehabili-

tate homes through a new collaboration in 10

states that linked Rebuilding Together’s local

affiliates with AARP state offices. Several state

offices also engaged in local coalitions on

livable communities issues.

AARP is leading the nation in enhancing the independence of those 50+ by promoting“livable communities.”

connecting generationsAARP members care about the generations that follow. Assisted by NRTA: AARP’s EducatorCommunity, retired educators and other AARPvolunteers are supporting new teachers andyoung students. Now in its third year, the NRTAEducator Support Network program pairs a retired educator with a new teacher from one of Chicago’s hard-to-staff schools and in schools across California.

Meanwhile, with support from the AARPFoundation and The Hartford, NRTA launchedthree College & Career Planning centers toassist at-risk youth. As a result, a cycle ofpositive change is occurring: more teachers are choosing to stay in the profession,more young people are prepared for successand more AARP members are fulfilling personal dreams.

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Our members—each and every one—really matterto us. We are constantly improving the way weserve and build relationships with them.

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in this important effort prefer to say that its

initials stand for “Members Really Matter.”

One goal of the MRM program is giving

members the right information, at the right

time, through the right channels.

With support from our Lakewood Service Center

team, we launched a pilot program that initially

focused on understanding the needs of a select

group of new members. We responded to them

with relevant, valuable information and offer-

ings. Their responses are helping us to prioritize

what we offer, giving members more of what

they do want—and less of what they don’t.

Our award-winning publications represent

the best way to deliver vital information and

engage every member. Readership of both

AARP The Magazine and the AARP Bulletin

was the highest ever in 2006, and distribution

of AARP Segunda Juventud (our Spanish/

English magazine) reached 800,000.

Life@50+ | AARP’s National Event & Expo,

held in Anaheim, CA, was another example of

terrific member value. A near-record number

of participants (24,800) and exhibitors (445)

came together to create a dynamic experience

featuring celebrities, concerts, speakers, local

tours, exhibits, university-quality seminars,

nightclubs and Movies for Grown-ups.

A beaming Patricia Hernandez of Anaheim

AARP members are at the center of everything

we do. Whether it is serving as a trusted

advocate; making available high-quality services

and information, especially to those marginal-

ized by inadequate income or poor health;

encouraging employers to hire 50+ workers

or promoting walking and other healthy

behaviors, AARP is dedicated to making life

better for all.

Our members are diverse in age—ranging

from boomers to the greatest generation.

They are diverse in lifestyle—nearly half work

full time or part time. AARP members may be

married or single, caring for parents, children

or grandchildren, seeking adventure or leaving

a legacy. We strive to achieve a membership

that mirrors the ethnic and age differences

among the nation’s 50+ population.

Our members—each and every one—really

matter to us. We are constantly improving the

way we serve and build relationships with them.

After all, the reason people renew their AARP

memberships, and encourage others to join,

is because we meet their specific needs.

Getting to “Wow!”In 2006, AARP increased our 360° understanding

of members in many ways, as part of an initia-

tive called Member Relationship Management

(MRM). Many AARP staffers who are involved

DeliveringValue to Members

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received a bear hug from actor Sylvester

Stallone after being named AARP’s official 37

millionth member. As a boomer, Hernandez

is part of the demographic growth of boomers

in AARP’s membership.

Another special moment in Anaheim included

the heartfelt thanks of Brenda Poché, who

received the key to her home, which had been

rebuilt following Hurricane Katrina with help

from the AARP Foundation and dozens of AARP

volunteers and staff who’d devoted their 2006

Day of Service there.

Elton John performed at Life@50+ in October,

and performances by Rod Stewart and Earth,

Wind & Fire will headline our Life@50+ event

in Boston next September.

In November, AARP announced that we will

be the exclusive presenting sponsor of “Tony

Bennett and The Best Is Yet To Come” concert

tour, featuring hits from

his new recording, Duets:

An American Classic.

The 2007 tour—the first

concert partnership of

its kind for AARP—will

visit 20 cities across the United States.

Membership Growth AARP’s overarching member value goal is to have

people 50+ join and remain members because

we deliver meaningful value and play a unique

role in their lives.

In 2006, we set, and exceeded, an aggressive

growth target: 37 million total members.

By year’s end, AARP had more than 37.7

million members.

And diversity among the membership increased,

as well, with 17 percent of AARP’s new members

coming from diverse groups.

We’ve set the bar even

higher for 2007—to

keep us moving toward

our goal of 50 million

members by 2011, the

year when the first wave

of boomers become eligible

for Medicare.

We are looking to transform our online presence

and electronic capabilities. Right now, our web-

site is an excellent information source, but we

want it to become a vehicle for building member

engagement through interactive tools—such

as seeing how your members of Congress voted

on a key bill, enabling caregivers to exchange

stories or advice and showing how different

communities compare for housing and

mobility options.

Brand Strategy AARP’s brand is the umbrella over all of our

member value initiatives. Based upon extensive

research, and true to the values originated with

Dr. Ethel Percy Andrus, AARP’s refreshed brand

builds upon “The Power to Make It Better,”

introducing five universal needs for health,

financial security, community, contribution,

and play, and the concept that “what we do,

we do for all.”

As AARP prepares to turn 50 in 2008, we are

embracing the half-century mark with the

same sense of vitality and renewal as our

members. We owe it to our members to keep

pace with them, to provide the innovative

and cutting-edge services that they demand

and to engage them in everything we—and

they—have to offer.

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Global AgingWe met with government officials, non-

government organizations, consumers and

business leaders in France, Norway, the United

Kingdom and the Netherlands and visited

hospitals and long-term care facilities to

observe how care is delivered. Although

these countries follow different approaches,

we found much from their experiences to

apply here in the U.S.

In September, in conjunction with the

European Commission, we hosted in Brussels

the Cross-Atlantic Exchange to Advance Long-

Term Care. The conference underscored that

providing high-quality, affordable long-term

care for older people is a key policy issue and

a challenge for many nations.

We launched the AARP Global Network in

2006 because the challenges of aging are not

the responsibility of governments alone. The

Network will provide strategic resources, proven

solutions and readily available benefits and

services for membership and subscription-based

organizations serving mature populations. It will

promote social change and help member organ-

izations to better meet the needs and interests

of their constituents. Its first charter member

is DaneAge (Denmark).

AARP is truly becoming an international

organization.

From the very earliest days of AARP, our

founder Ethel Percy Andrus recognized the

impact of aging around the world. In 1963,

she established the Association of Retired

Persons International.

With the aging of populations worldwide, it’s

even more imperative that AARP have an inter-

national presence in order to inform domestic

policy with the best ideas and practices from

around the world.

In March, we sponsored an international

conference on the use of health information

technology. Speakers from Australia, Germany,

England, Ireland and Canada shared their

techniques and successes in implementing

national health IT systems.

In June, our Board of Directors and Executive

Team conducted a European leadership study

to examine best practices and poli-

cies for delivering and

financing health and

long-term care.

AARP is truly becoming aninternational organization.

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Looking AheadSocial Impact and MemberValue in 2007

We’ll bring a “revolution” to Boston in

September with Life@50+ | AARP’s National

Event & Expo. Then NRTA: AARP’s Educator

Community will celebrate its 60th anniversary

with special events.

We will also unveil plans for a year-long

celebration of AARP’s 50th anniversary, which

occurs in 2008. This important milestone

provides a host of opportunities for us to

promote how AARP has championed the

principles of collective purpose, collective

voice and collective purchasing power since

1958. It will also be a coast-to-coast celebration

for all ages that promises lots of fun.

On the international front, AARP President

Erik Olsen will discuss major developments

and trends in global aging at the United

Nations and the AARP Global Network will

expand its effort to foster best practices

among aging organizations worldwide.

AARP will blast into the new year with a bold,

national campaign (to be known as “Divided

We Fail”) designed to amplify the voices of

Americans on health and financial security

issues. It will help propel our nation’s business,

political and nonprofit leaders to take action

to ensure that every American can count

on health care and lifetime financial security.

Building alliances, including those with

corporate leaders and labor unions, will be

an integral part of this effort. AARP will lead by

example and won’t stop until real solutions are

in place. One goal is to persuade all candidates

for Congress and the presidency in 2008 to

focus on health and financial security issues.

As part of our commitment to diversity we will

hold our first Spanish language-only event

in Puerto Rico, in May, celebrating “second

youth” (Feria de la Segunda Juventud) and

then a major diversity conference in Los

Angeles in June.

AARP will lead by example and won’t stop until real solutions are in place.

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Board ofDirectors

The AARP Board of Directors directs the

affairs and resources of AARP. Like AARP’s

members, the Board reflects 50+ America:

they are working and retired, from coast-to-

coast and the U.S. territories, and have a broad

range of experience in health, education,

business, community service, policy and

international affairs.

AARP’s All-Volunteer

for the 2006–2008 Biennium

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Erik D. OlsenErik D. Olsen, D.D.S, of Glenbrook, NV, is AARP’s President. He serves on the BoardGovernance Committee and the GovernmentRelations Committee. He is also a memberof the AARP Financial, Inc. Board and the CEOEvaluation Committee. Dr. Olsen was an executive committee member of the U.S. Healthand Human Services Secretary’s AdvisoryCommittee on Regulatory Reform. In 1992, heretired as president and CEO of Delta DentalPlan of California. Previously, he was executivedirector and managing editor of the Academy of General Dentistry and also served in the U.S.Army. Dr. Olsen’s recognitions include inductioninto the Delta Dental Association Hall of Fameand receipt of the first Hillenbrand Fellowship in Dental Administration.

Joanne DischJoanne Disch, Ph.D., R.N., F.A.A.N., of Minneapolis,MN, serves as Vice President-Board Governance/Board Chair and, in that capacity, chairs theAARP Board’s meetings and the BoardGovernance Committee. She also chairs theGovernance Review Committee and the CEOEvaluation Committee. She is professor anddirector of the Katharine J. Densford InternationalCenter for Nursing Leadership. She is past president of the American Association of Critical-Care Nurses. She has been an administrator in a number of health care facilities and has pastexperience as an educator, researcher, policymaker and spokesperson. Dr. Disch is a memberof the boards for the American Academy ofNursing and the Allina Health System.

Jennie Chin HansenJennie Chin Hansen, R.N., M.S., F.A.A.N., ofSan Francisco, CA, is AARP’s President-Electand will become AARP’s 23rd National Presidentin 2008. She serves on the Board Audit andFinance Committee, the Governance ReviewCommittee and the AARP Services, Inc. Board.For nearly 25 years she was executive directorof On Lok, Inc., a family of nonprofit organizationsproviding comprehensive and community-based

long-term care services in San Francisco. TheOn Lok model is now being emulated in all 50states. Ms. Hansen teaches nursing at SanFrancisco State University, and is a senior fellowat the University of California Center for the HealthProfessions. Her numerous awards include the2005 Center for Medicare and Medicaid ServicesAdministrator’s Achievement Award.

W. Lee HammondW. Lee Hammond of Salisbury, MD, is VicePresident–Secretary/Treasurer and in thiscapacity chairs the Board Audit and FinanceCommittee. He also chairs the NationalNominating Committee and is a member of theGovernance Review Committee. He is a memberof the Maryland Commission on Aging and theMaryland Innovations in Aging Services GrantProgram Advisory Council. Mr. Hammond retiredfrom a 30-year career with the Wicomico County,MD, Board of Education as a classroom teacherand school administrator. In recognition of hisvolunteer service, Mr. Hammond received theGovernor’s Salute to Excellence and was electedto the Maryland Senior Citizens Hall of Fame.

Bonnie M. CramerBonnie M. Cramer, M.S.W., of Raleigh, NC, isVice President-Membership, and in that capacitychairs the Board Membership Committee. She also serves on the Governance ReviewCommittee and the AARP Insurance Trust. An experienced budget and human servicesexpert, Ms. Cramer retired from a 30-yearcareer with the North Carolina Department ofHealth and Human Services and the Governor’sOffice of State Budget and Management. Shehas served on the board of the NationalAssociation of State Units on Aging and on the advisory committee for the National Centeron Elder Abuse. Her many awards include a Leadership in Aging Award from the DukeUniversity Center for Aging.

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Yash AggarwalYash Aggarwal, Ph.D., JD, of Costambar, PuertoPlata, Dominican Republic, is vice chair of theBoard Audit and Finance Committee and a memberof the AARP Services, Inc., Board and the AARPNational Policy Council Nominating Committee.In 2002, Dr. Aggarwal founded IndiaPAC—India-U.S. Political Action Committee—to foster betterrelations between the United States and India.Previously, he chaired the Asian-American Coalition,a nonprofit public interest organization that facili-tated the integration of Asian Americans into themainstream. An attorney and an academic, Dr.Aggarwal is fluent in Spanish, French and severalIndian languages. He retired from MetLife andSensearth, Inc., a corporation providing consultingservices on seismic risk.

Nelda BarnettNelda Barnett of Owensboro, KY, chairs the AARPFoundation Board of Directors and is a memberof the Board Governance Committee and theAARP Financial, Inc. Board. She has 38 years ofexperience in human services, most of which werededicated to helping older Americans. She wasdirector of the Area Agency on Aging (AAA) and,in 1999, retired as director of Maplebrook Village,Christian Church Homes of Kentucky. She currently is a volunteer with both organizations. Mrs. Barnettreceived the Owensboro Mayor’s Award forExcellence, the Elizabeth Munday Award and theThoroughbred Award for Outstanding Advocacy on Behalf of the Elderly from the KentuckyAssociation for Gerontology.

Cora L. ChristianCora L. Christian, M.D., MPH, of Frederiksted,Virgin Islands (VI), is vice chair of the AARPInsurance Trust, and a member of AARP’sGovernance Committee and the NationalNominating Committee. Dr. Christian has the distinction of being the first native female of theU.S. Virgin Islands to become a medical doctor. A practicing family physician, she is chief medicalconsultant to Hovensa, L.L.C., and serves asHealth Care Quality Improvement Director. Hernumerous honors and recognitions include the

2003 Physician of the Year Award from the VIMedical Society and the Best Doctors in AmericaAward in 1999.

Leobardo EstradaLeobardo Estradra, Ph.D., of Playa del Rey, CA,serves on the Board Audit and Finance Committeeand the CEO Evaluation Committee. Professionally,Dr. Estrada is a professor of urban planning at theUniversity of California, Los Angeles. He has servedas an advisor on national data systems to severalnational agencies and councils including the U.S.Census Bureau, the National Center for HealthStatistics and the National Research Council. His social science expertise includes the demography of Latinos in the U.S. Among Dr.Estrada’s numerous awards are the KelloggFoundation National Leadership Fellow Award and a Community Service Award from the MexicanAmerican Legal Defense and Education Fund.

William HallWilliam Hall, M.D., of Rochester, NY, serves asvice chair of the Board Governance Committeeand is a member of AARP’s Insurance Trust. An academic geriatrician, Dr. Hall is directorof the Center for Healthy Aging. Previously,he served as chief of general medicine/geriatrics at the University of Rochester School of Medicineand chief of medicine at Rochester GeneralHospital. He has testified on numerous healthissues before Congress and federal agencies. His honors include the Kaiser Award for ExceptionalService from the Rochester Academy of Medicineand the Jahnigen Award for outstanding educationcontributions from the American Geriatrics Society.

Joanne HandyJoanne Handy, R.N., M.S., of Boston, MA, serveson the Board Governance Committee and the CEOEvaluation Committee. Professionally, Ms. Handyis president and CEO of the Visiting NurseAssociation of Boston. Ms. Handy has receivednumerous awards including the Leadership Awardfrom the American Society on Aging, the Memberof the Year Award from Women Health Care

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Executives and the Outstanding Alumni Awardfrom Rutgers University College of Nursing. She was a fellow in the Kellogg FoundationInternational Leadership Program. As a volunteer,she serves on the executive committee of theAmerican Society on Aging and on the board of the Visiting Nurse Association of America.

Richard JohnsonRichard Johnson, of Wilmington, DE, is vice chairof the Board Committee on Membership and serveson the AARP Insurance Trust. He is also co-chairof AARP’s 50th Anniversary Celebration Committee.He has served on several task forces to helpensure the protection of older people in Delawareincluding the Delaware Attorney General’s SeniorVictims Task Force, the Adult Protective ServicesAdvisory Council and the Medicare Fraud PatrolSteering Committee. Prior to retirement, Mr.Johnson was district sales manager and directorof national accounts for the Monsanto Company.Honors he has received include the Governor’sOutstanding Volunteer Award and the VolunteerLeader of the Year Award.

Mara MayorMara Mayor, Ph.D., of Bethesda, MD, serves on the Board Membership Committee, the AARPInsurance Trust and the Governance ReviewCommittee. Dr. Mayor is associate director ofeducation at the Smithsonian Zoological Parkin Washington, DC. As a volunteer, Dr. Mayorserves as a member of the Collaboration TaskForce for AARP's Women's Leadership Circle and is a member of the WETA Public Television/RadioBoard involved with local, national and worldwideprogramming. Dr. Mayor was instrumental in positioning the Annenberg/CPB Project as aleader in using telecommunications technologiesfor education and philanthropy, which resulted in over 100 major awards, including an Emmy and the Peabody Award for its programs.

Maeona MendelsonMaeona Mendelson, Ph.D., of Kailua, HI,is a member of the AARP Board GovernanceCommittee and the AARP National Nominating

Committee. She is executive director of theHawaii Intergenerational Network and adjunct professor at Hawaii Pacific University. Previously,she was program director for the HawaiiCommunity Services Council and director ofdevelopment and public relations for the YWCA.Her numerous honors include an award from the Kingdom of Morocco for strengthening thecooperative relationship between Morocco and Hawaii, and a commendation from theHonolulu Department of Economic Development for leadership of Millennium Young People'sCongress. Recently, she was selected as SocialWorker of the Year in Gerontology in Hawaii.

N. Joyce PayneN. Joyce Payne, Ed.D. of Nashville, NC, is a memberof the Board Audit and Finance Committee andthe AARP Foundation Board of Directors. Dr. Payneis director of the human resources and minorityprograms for the National Association of StateUniversities and Land-Grant Colleges. Previously,she was president of Global Systems, Inc., andfounded the Thurgood Marshall Scholarship Fund,which has awarded over $50 million in scholarshipassistance and capacity-building support. Amongher numerous honors are an honorary doctoratedegree from Lincoln University, a PresidentialLeadership Award from Delaware State Universityand a fellowship from the Ford Foundation.

Clarence PearsonClarence Pearson of New York, NY, is a memberof the Board Audit and Finance Committee andvice chair of the AARP Foundation Board. Mr.Pearson is a former senior advisor to the WorldHealth Organization Office at the United Nations.He served as vice president of the Peter DruckerFoundation for Nonprofit Management and as former vice president of Health and SafetyEducation for Metropolitan Life. Mr. Pearson isexecutive editor of a book series on global healthpublished by Jossey-Bass/John Wiley & Sons. He serves on various boards and founded theScott and June Pearson Fund for Patient Advocacyat his alma mater, the University of North CarolinaSchool of Public Health/Chapel Hill.

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Robert RomascoRobert Romasco, M.B.A., of Bryn Mawr, PA,is a member of the AARP Board Audit and FinanceCommittee and the Governance ReviewCommittee. He has extensive experience in corporate operations and financial management,as well as experience in legislative and govern-mental strategies. His employment experienceincludes service as senior vice president ofcustomer, distribution and new business development at the Quality Value Convenience(QVC) television network. Previously, he was anexecutive with CIGNA Health Care Systems,J.C. Penney Direct Marketing Services andAmerican Century Investments. His volunteerwork includes prior service on the AARP AndrusFoundation Board of Directors and numerouschurch positions.

T. George Rowan T. George Rowan, Ph.D., East Lansing, MI,serves on the Board Membership Committeeand the AARP Foundation Board. He also is a member of the National Policy CouncilNominating Committee. He is currently a pro-fessor at Michigan State University. Previously,he was director of the University’s David WalkerResearch Institute, and was also a principal in the Grand Rapids School System. Among hishonors, Dr. Rowan has received an ExemplaryService in Academia Award from the AmericanSociety for Public Administration, a ServiceAward from the Western Michigan RegionalHealth Committee, an Outstanding MentorAward from Michigan State University and the Black Educator of the Year in Michigan and Ohio from the Peace Corps.

Mary C. ScottMary C. Scott, of Bedford, TX, serves on theBoard Membership Committee, the AARPInsurance Trust and AARP’s 50th AnniversaryCelebration Committee. Prior to being electedto AARP’s board, Ms. Scott chaired the AARPNational Legislative Council and was active inAARP voter education efforts. In her community,Ms. Scott has been active in the RetiredTeachers Association and chaired the Senior

Political Action Committee of Tarrant County.She also is co-founder of the Tarrant Coalitionfor Environmental Awareness. A speech patholo-gist, Ms. Scott practiced in public schools for 24 years and was an instructor of English as a Second Language at a local college. She is also certified to teach language- and learning-disabled children.

T. Byron ThamesT. Byron Thames, M.D., of Orlando, FL, is chairof the AARP Insurance Trust and serves on theBoard Membership and Governance ReviewCommittee. He is medical director of the FloridaHospital Human Resources, the Darden EmployeeClinic and COMPNET, a managed care organiza-tion for occupational medicine. Dr. Thames consults on medical issues to the Area Agencyon Aging (AAA) for Central Florida, the RetiredSenior Volunteer Program and the SeniorResource Alliance, and is the medical providerfor the AAA Medical Mobile Clinic for the Elderly.Among his awards are the Art of Medicine Awardfrom the Florida Academy of Family Physicians,the Florida Family Physician of the Year Awardand Duke University’s Distinguished MedicalAlumni Award.

F. John Zarlengo F. John “Phil”Zarlengo, Ph.D., of Jamestown,RI, is a member of the Board MembershipCommittee and the AARP Insurance Trust. He is a national consultant for developing and evaluat-ing innovative staff training programs for urbanschool systems. Formerly, he served as executivedirector of Brown University's RegionalEducation Laboratory, one of the nation'slargest research centers dedicated to reform of schools, state and national education institu-tions, and public and private agencies and universities. His awards include a President'sAward from the National Education KnowledgeIndustry Association for promoting research-based models in education; and a recognitionand appreciation award from Bradley Hospital for his interdisciplinary work on education and health.

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erik d. olsen jennie chinhansen

joanne disch w. leehammond

bonnie m.cramer

yash aggarwal

nelda barnett cora l. christian

leobardoestrada

william hall joanne handy richard johnson

mara mayor maeonamendelson

n. joyce payne clarencepearson

robertromasco

t. georgerowan

mary c. scott t. byronthames

f. johnzarlengo

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The AARP Executive Team

Bill Novellichief executive officer

Rob Haganschief financial officer

John Rothergroup executive officer,policy and strategy

Joan Wisegeneral counsel

Dawn Sweeneypresident, aarp services, inc.

Tom Nelsonchief operating officer

Chris Hansengroup executive officer,state and national initiatives

Shereen Remezgroup executive officer, membership

Robin Talbertexecutive director, aarp foundation

Kevin Donnellanchief communications officer

Nancy LeaMondgroup executive officer, social impact

Ellie Hollanderchief people officer

Emilio Pardochief brand officer

Left to right: Robin Talbert, Emilio Pardo, John Rother, Shereen Remez, Tom Nelson, Ellie Hollander, Bill Novelli,

Chris Hansen, Dawn Sweeney, Kevin Donnellan, Rob Hagans, Nancy LeaMond, (seated) Joan Wise

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The following summary financial information is from the consolidated statements of activitiesand financial position of AARP and its affiliates for the year ending December 31, 2006.

Summary of 2006 AARP Consolidated Financial Statements

RevenueOur total operating revenue in 2006 was $1.01

billion, an increase of 7.9 percent over 2005.

Nearly two-thirds of all the revenues generated

in 2006 to support AARP programs and services

were derived from membership dues ($240

million) and royalties and service provider

relationship management fees ($403 million).

There were also other sources, including federal

grant funds, which were received and managed

by the AARP Foundation and Legal Counsel

for the Elderly, AARP’s affiliated charities.

ExpensesOur operating expenses totaled $1.04 billion

in 2006, an increase of 12.9 percent over 2005.

We continued to make investments in member

services and social impact areas to continue

fulfilling our mission. Our expenditures on

member service activities reached $221 million

in 2006, an increase of 11.5 percent over 2005.

This funding helped continue efforts to improve

communication with our more than 37 million

members and to increase the benefit of AARP

membership. In addition, we invested $104

million in member development.

Increasing our membership and visibility

continued to be a critical component of

strengthening our core advocacy and reinforcing

our social impact work. To further our social

impact goals, we spent $67 million in legislation

and research in 2006. These costs included

funding our research information center,

knowledge management group, and government

relations and advocacy at the federal level and

in our 53 state offices. Some of our activities

included efforts to make prescription drugs

more affordable, fight predatory lending and

expand long-term financial security options.

As a result of ongoing cost-containment

efforts, management and general expenses

increased only slightly on a year-over-year

basis. This represented 18.9 percent of revenue

in 2006, compared with 18 percent in 2005.

These costs included our investment in

human resources, information technology,

and support services such as finance, legal,

and internal audit.

AARP’s Consolidated Statement of Financial

Position remained strong as assets increased

by $18 million for calendar year 2006. Our net

assets totaled $308 million at the end of the

year with $199 million designated by the Board

for future uses.

The complete AARP 2006 Audited Financial

Statements are available on the Internet at

www.aarp.org/annualreport.

our vision

A society in which everyone ages with dignity and purpose,

and in which AARP helps people fulfill their goals and dreams.

our mission

AARP is dedicated to enhancing quality of life for all as we age. We lead positive social change

and deliver value to members through information, advocacy and service.

AARP is a nonprofit, nonpartisan membershiporganization that helps people 50+ have inde-pendence, choice and control in ways that arebeneficial and affordable to them and society as a whole. We produce AARP The Magazine,published bimonthly; AARP Bulletin, our monthlynewspaper; AARP Segunda Juventud, our bimonthlymagazine in Spanish and English; NRTA Live & Learn,our quarterly newsletter for 50+ educators; andour website, AARP.org. AARP Foundation is anaffiliated charity that provides security, protection,and empowerment to older persons in need withsupport from thousands of volunteers, donors,and sponsors. We have staffed offices in all 50states, the District of Columbia, Puerto Rico,and the U.S. Virgin Islands.

photo credits

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design

fuszion

601 E Street, NW, Washington, DC 200491-888-OUR-AARP (1-888-687-2277) toll free

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Documents

2006 ANNUAL REPORT · Security with my passion for quality, affordable health care for all. This is the focus of my two-year tenure as president. AARP believes ... In other book-publishing