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Decade in Review: High Gas Prices Had Biggest Impact on Financial Well-Being

High cost of gasoline packed more of a financial punch for Americans than real estate market decline and Dow Jones drop.

December 3, 2009 (Des Moines, IA) - Americans named spiking gasoline prices in the summer of 2008 as the No. 1 factor that affected their financial well-being in the last decade. Twenty-six percent of workers and 22 percent of retirees ranked high gas prices as their top concern, ahead of the decline in the real estate market over the last three years (14 percent of workers and 12 percent of retirees) and the Dow Jones Industrial Average's slide below 7,000 in March 2009 (13 percent of workers and 20 percent of retirees). The findings are among new research released from the Principal Financial Well-Being IndexSM.

Lessons Learned - Financial New Year's Resolutions

The survey also suggests that while the recent economic crisis has left an indelible mark on Americans' psyches, it also taught many people some valuable lessons and helped impart new, more positive financial behaviors.

When asked to name the most important lesson they learned from the past decade, both workers and retirees said having an emergency fund in the event of unforeseen illness, disaster or job loss was No. 1. In fact, 17 percent of workers and 14 percent of retirees said they tapped into their emergency fund recently to cover monthly expenses. Looking ahead, respondents said their top two financial New Year's resolutions are putting a set amount of money into savings each month (32 percent of workers and 19 percent of retirees) and paying off credit card debt (33 percent of workers and 19 percent of retirees).

"As we all struggle to overcome recent economic turmoil, Americans are laying a new financial foundation for their future and focusing on rebuilding their savings responsibly," said Dan Houston, president of retirement and investor services at the Principal Financial Group®. "While planning for the long term, workers and retirees are also mindful of possible near-term downturns as we continue to rebuild as a nation."

The Principal Financial Well-Being Index, which surveys both American workers at growing businesses with 10 to 1,000 workers and retired Americans, is released quarterly by the Principal Financial Group and is conducted by Harris Interactive®.

New Behaviors - Permanent Change in Mind-Set?

When asked how the current economy has impacted their overall spending in the past two months, two-thirds of employees and nearly six out of ten retirees (58 percent) said they have reduced their overall spending to some degree. More than half of workers and retirees (59 percent and 53 percent) are tracking their finances more closely as a result of the downturn. In addition, the majority of both employees and retirees (74 percent and 77 percent) said they will continue to spend less after the downturn comes to an end.

Other key findings include:

  • Saving through the holidays:
    • Because of current economic conditions, 46 percent of workers indicated they would be scaling back on the number of people they buy gifts for and nearly 45 percent indicated they would be spending less per gift this holiday season. Nineteen percent said they plan to donate less to charities during the holidays.
    • The same rings true for retirees with at least a quarter saying they would either be spending less per gift (36 percent), scaling back the number of people they buy gifts for (30 percent) or donating less to charity this holiday season (27 percent).
    • A quarter of workers said they would be traveling less this season.

"This cutback in holiday spending suggests that Americans are changing their mindset; spending and savings habits have been reprioritized," Houston said.

  • Optimism remains, retirement savings rise:
    • More than a third of workers (37 percent) and 24 percent of retirees say they feel better off financially now than they did at the beginning of 2009.
    • Three out of 10 workers (31 percent) and two out of 10 retirees (20 percent) choose "optimistic" to describe their sentiment toward the economy.
    • Workers have increased the amount they are saving for retirement in the past six months, with 18 percent reporting this for fourth quarter 2009, compared with 14 percent in the second quarter of this year.
    • Twenty-one percent of workers in the fourth quarter say their retirement balance is the same or higher than it was on Jan 1, 2009, compared with only 9 percent in the second quarter of this year.

See the full report and past results at www.principal.com/wellbeing.

Methodology

This Principal Financial Well-Being IndexSM survey was conducted online within the United States by Harris Interactive on behalf of the Principal Financial Group between Oct. 20, 2009, and Oct. 30, 2009, among 1,120 employees and 602 retirees. Results were weighted as needed for age by gender, education, race/ethnicity, region and household income. Propensity score weighting was also used to adjust for respondents' propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available.

This is one in a series of quarterly studies to identify and track changes in the workplace of small and midsize (growing) businesses. The first Principal Financial Well-Being IndexSM survey was conducted in the United States in 2000.

About the Principal Financial Group

The Principal Financial Group® (The Principal®)[1] is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $280.4 billion in assets under management[2] and serves some 18.6 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

About Harris Interactive

Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research that is powered by our science and technology, we assist clients in achieving business results. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. For more information, please visit www.harrisinteractive.com.

[1]
"The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
[2]
As of September 30, 2009
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