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The Principal Financial Well-Being IndexSM Employee and Retiree Comparison Questions - Fourth Quarter 2006

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Employee Financial Well Being

In measuring employees' and retirees' attitudes and perceptions about their financial well-being, a series of different questions were asked. Employees and retirees were asked to identify how much they agreed with some statements relating to how concerned they are about their long-term financial future and how happy they are about their current well-being. As seen in table 1, employees (71%) are significantly more likely to be concerned about their long-term financial future than retirees (50%).

Almost half (48%) of the retirees are extremely happy about their current financial well-being compared to (29%) of the employees. There are significant differences between responses from retirees and employees - indicated with "sig" below. When comparing employee results with last year at this time, there are no statistically significant differences.

Table 1

"Please indicate the extent to which you agree or disagree with each of the following statements."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

(% of respondents agreeing completely or somewhat) 4th Qtr 2006 4th Qtr 2005
EE
4th Qtr 2004
EE
Retiree EE
I am very concerned about my long-term financial future. 50%sig 71% 73% 77%
I am extremely happy about my current financial well-being. 48% sig 29% 29% 34%
I have not yet planned for retirement savings/security. N/A 28% 25% 27%
  N=630 N=1197 N=1,213 N=1,736

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Holiday Spending

Employees and retirees were asked about their intentions for spending in the upcoming holiday season. Significantly more employees (9%) than retirees (5%) said they would be spending more money than last year.

Table 2

"During the upcoming holiday season, do you intend to...?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Holiday Spending Intentions 4 Qtr 2006
Retiree
4 Qtr 2006
EE
4 Qtr 2002
EE
Spend less money than last year 36% 37% 39%
Spend the same amount of money as last year 60% 54% 52%
Spend more money than last year 5%sig 9% 8%
  N=630 N=1197 N=2056

New Year's Financial Resolutions

Employees and retirees were given a list of potential resolutions and asked which, if any, they intended to make as New Year's resolutions in 2007. The top two resolutions selected by employees were paying off credit card debt (37%) and putting a set amount of money into savings each month (33%). The resolution selected by the most retirees (15%) was to reduce my spending by a specific amount each month. Half (51%) of the retirees responded they don't intend to make resolutions compared to 29% of the employees.

Table 3

"Which of the following, if any, do you intend to make as New Year's resolutions in 2007? Please select all that apply."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Financial Resolution 4 Qtr 2006
Retiree
4 Qtr 2006
EE
Pay off credit card debt. 13%sig 37%
Put a set amount of money into savings each month. 12%sig 33%
Reduce my spending by a specific amount each month. 15%sig 20%
Stop using my credit cards. 10%sig 18%
Defer more in my defined contribution/401(k) plan. 1%sig 14%
Work with a financial planner or other financial advisor. 5% 7%
Other 4% 6%
None of these 16%sig 9%
I don't intend to make a resolution. 51%sig 29%

sig - varies significantly (95% level) from retiree and employee comparison

November Elections

Employees and retirees were given a list of issues and asked which they are most concerned about in the November elections. There were significant differences in the results between employees and retirees which are noted in Table 4. The issue that most employees and most retirees said they were concerned about was the war in Iraq. It was selected by three out of five (60%) employees and by four out of five (79%) retirees. Healthcare was listed as a concern by two-thirds of the retirees and a little over half of the employees (53%). There have been significant changes on these issues since they were asked in 2004.

Table 4

"What issues are you most concerned about in the upcoming November 2006 election? Please select all that apply."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Issues for Election 4 Qtr 2006
Retiree
4 Qtr 2006
EE
3 Qtr 2004
EE
War in Iraq 79%sig 60% N/A
Economy/Jobs 45%sig 57%SIG 81%
Healthcare 67%sig 53%SIG 71%
Taxes 47% 47% N/A
My financial well-being 36%sig 44%SIG 58%
Homeland Security 54%sig 42%SIG 60%
Education 27%sig 35%SIG 45%
Other 10% 10%SIG 19%
None 2% 4%SIG 1%
  N=630 N=1197 N=1227

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Just over half of the employees and retirees feel their financial well-being will be about the same in the upcoming year if there is a change in Congressional control. Approximately one-quarter of the retirees (27%) and employees (23%) feel it will be worse.

Table 5

"If the November elections result in a change in Congressional control, what do you think the impact will be on your financial well-being in the upcoming year?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Impact on Financial Well-Being 4 Qtr 2006
Retiree
4 Qtr 2006
EE
Worse 27% 23%
About the Same 55% 54%
Better 19% 22%

sig - varies significantly (95% level) from retiree and employee comparison

Financial Professional

A series of questions were asked of employees and retirees regarding financial professionals and personal financial plans. Table 6 shows that 14% of employees and 23% of retirees say they have paid or their employer has paid to have a financial professional develop a personal financial plan for them. Table 7 shows that 62% of the retirees had their plan developed three years ago or more, significantly more than the employee group (32%). Significantly more employees (38%) have had a personal financial plan developed in the past 12 months than retirees (21%).

Table 6

"Have you or your employer ever paid to have a financial professional develop a personal financial plan for you?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Paid a Financial Professional 4 Qtr 2006
Retiree
4 Qtr 2006
EE
4 Qtr 2003
EE
Yes 23%sig 14%SIG 20%
No 77%sig 86%SIG 80%
  N=630 N=1197 N=1344

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Table 7

"How recently did you have a professional develop your personal financial plan?"
Base: n= 174 employed U.S. Adults and 165 retirees (based on respondents who have had a financial plan developed)

Used a Financial Professional to Develop Plan 4 Qtr 2006
Retiree
4 Qtr 2006
EE
4 Qtr 2003
EE
Within the past 12 months 21%sig 38% 37%
More than 1 year, but less than 2 years ago 14% 20% 21%
More than 2 years ago, but less than 3 years ago 3% 10%SIG 17%
3 years ago or more 62%sig 32% 25%
  N=165 N=174 N=242

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Two-thirds of retirees (68%) have met with their financial professional since the plan was developed to update the information compared to 41% of the employees.

Table 8

"Have you met your financial professional since the plan was developed to update the information?"
Base: n= 174 employed U.S. Adults and 165 retirees (based on respondents who have had a financial plan developed)

Met to Update Plan 4 Qtr 2006
Retiree
4 Qtr 2006
EE
4 Qtr 2003
EE
Yes 68%sig 41%SIG 54%
No 32%sig 59%SIG 46%
  N=165 N=174 N=242

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Four out of ten employees and retirees say they have someone they trust and look to for advice on how to save for retirement.

Table 9

"Do you currently have someone whom you trust and look to for advice on how to save for retirement?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Someone for Retirement Advice 4 Qtr 2006
Retiree
4 Qtr 2006
EE
4 Qtr 2003
EE
Yes 41% 40%SIG 44%
No 59% 60%SIG 56%
  N=630 N=1197 N=1344

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Financial Needs

Employees and retirees were given a list of five financial needs and asked to rank them in importance. The item ranked as most important by the largest number of employees (40%) was retirement planning. This same question was also asked of employees in 2003 and retirement planning was ranked as the most important by significantly more employees (48%).

Savings or accumulation goals were ranked as most important by the largest number of retirees (42%) followed by retirement planning with 24%.

Table 10

"Please rank the following five financial needs in terms of how important they are to you. Type a "1" next to the financial need that is most important to you, a "5" next to the least important financial need, and "2", "3" or "4" next to the financial needs of second, third, and fourth importance to you."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Financial Need Importance Ranked #1
Retiree 4th Qtr
2006 EE
4th Qtr 2003
EE
Retirement planning 24%sig 40%SIG 48%
Savings or accumulation goals 42% 36%SIG 31%
Disability income protection 15% 11%SIG 8%
Education planning/funding 5% 8% 8%
Estate planning with survivor benefits (life insurance) 15%sig 5% 6%
  N=630 N=1197 N=1344

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

Mandatory Retirement Age

Employees and retirees were asked if they felt companies should have a mandatory retirement age. The results were not statistically significant between employees and retirees. Ten percent of the employees feel there should be a mandatory retirement age compared to 13% of the retirees. Respondents who said there should be a mandatory retirement age were asked to specify what that age should be. The mean or average age provided by retirees was 66.9 years old. The mean or average age for the employee group was 63.4 years.

Table 11

"Do you think companies should have a mandatory retirement age?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Position on Mandatory Retirement Age 4 Qtr 2006
Retiree
4 Qtr 2006
EE
Yes 13% 10%
No 87% 90%

sig - varies significantly (95% level) from retiree and employee comparison

Table 12

"What should be the mandatory retirement age?"
Base: n=89 employed U.S. adults and 82 retirees (based on those who feel there should be a mandatory retirement age)

Mandatory Retirement Age 4 Qtr 2006
Retiree EE
Under age 50 0% 5%
Age 50-55 1% 11%
Age 56-59 0% 0%
Age 60-64 9% 16%
Age 65 41% 36%
Age 66-69 16% 9%
Age 70 or older 33% 23%
Mean 66.9 years 63.4 years
  N=82 N=89

sig - varies significantly (95% level) from retiree and employee comparison
Note: due to small sample size data should be used directionally

Average Cost of a Doctor's Office Visit

Employees and retirees were asked to estimate the average cost of an average doctor's office visit for someone who does not have insurance. The majority of employees (68%) and retirees (62%) believe it would cost $85 or more. When comparing employee results with last year, there have been significant increases. See Table 13 below for results.

Table 13 - Average Cost of Doctor's Office Visit

"How much (on average) would you estimate an average doctor's office visit costs someone without any insurance?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees and 630 retirees

Average Doctor's Office Visit without Insurance 4 Q 2006
Retiree
4 Q 2006
EE
4 Q 2005
EE
Less than $40 3% 3% 3%
$40 to $64 14%sig 10% 11%
$65 to $84 21% 20%SIG 24%
$85 to $109 29%sig 23% 25%
$110 to $134 14% 18%SIG 15%
$135 to $150 8%sig 13%SIG 9%
More than $150 11% 14% 12%
  N=630 N=1197 N=1213

SIG= Significant at the 95% confidence level
sig - varies significantly (95% level) from retiree and employee comparison

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