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The Principal Financial Well-Being IndexSM Executive Summary - Fourth Quarter 2006

The Principal Financial Group®, the nation's 401(k) leader1, commissioned Harris Interactive® to conduct online research with employees (ages 18+) of small and mid-sized (SMB) U.S. businesses (firm size 10 – 1,000 employees) about their attitudes and perceptions regarding their financial well being and their current employee benefits. To compare responses, Harris Interactive also interviewed a group of retirees.

Harris Interactive conducted The Principal Financial Well-Being Index survey online among 1197 employees and 630 retirees from October 23-November 1, 2006. Data were weighted to be representative of the entire population of adult employees working for small to midsized U.S. businesses and retirees on the basis of age by gender, age, education, race/ethnicity, region, income and propensity to be online.

With a probability sample size of 1,197 and 630, one can say with 95% probability that the overall results would have a sampling error of ± 3 percentage points and ± 4 percentage points respectively. Sampling error for data based on sub-samples may be higher and may vary. However, that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.

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

Key Findings

Employee and Retiree Comparisons

  • Holiday Spending Intentions for Upcoming Season
    • Employees
      • 54% plan to spend the same amount as last year
      • 37% plan to spend less money than last year
    • Retirees
      • 60% of the retirees plan to spend the same amount as last year
      • 36% of retirees plan to spend less money than last year
  • Top Two Potential New Year's Financial Resolutions for 2007
    • Employees
      • 37% selected paying off credit card debt
      • 33% selected putting a set amount of money into savings each month
      • 29% said they don't intend to make a resolution
    • Retirees
      • 15% selected to reduce spending by a specific amount each month
      • 51% said they don't intend to make a resolution
  • Change in Financial Well-Being with a Change in November Elections
    • Employees
      • 54% feel their financial well-being will be about the same
      • 23% feel it will be worse
    • Retirees
      • 55% feel their financial well-being will be about the same
      • 27% feel it will be worse
  • Have Paid a Financial Professional to Develop a Plan
    • Employees
      • 14% have paid or their employer has paid to have a financial professional develop a personal financial plan
      • 41% have met with the financial professional since the plan was developed to update information
      • 40% say they have someone they trust and look to for advice on how to save for retirement
    • Retirees
      • 23% have paid or their employer has paid to have a financial professional develop a personal financial plan
      • 68% have met with the financial professional since the plan was developed to update information
      • 41% say they have someone they trust and look to for advice on how to save for retirement
  • Rank of Importance for Financial Needs
    • Employees
      • 40% ranked retirement planning as most important
    • Retirees
      • 42% ranked savings or accumulation goals as most important
      • 24% ranked retirement planning as the most important
  • Companies having a Mandatory Retirement Age
    • Employees
      • 10% feel there should be a mandatory retirement age
      • Mean or average suggested mandatory retirement age was 63.4 years
    • Retirees
      • 13% feel there should be a mandatory retirement age
      • Mean or average suggested mandatory retirement age was 66.9 years

View questions and data

Employees Only

  • Workplace Issues
    • Why Employees Go to Work
      • 89% said "to pay the bills"
      • 64% responded "because I need the benefits"
      • 51% said "to save for the future"
    • What Employers Could be Doing to Help Them Get More Out of Work
      • 73% said providing better pay for performance
      • 47% would like to have better workplace benefits
    • Length of Average Workweek Compared to a Year Ago
      • 29% say they are working more this year
      • 59% say it is about the same
  • Managing Investments
    • How They Make Investment Choices
      • 54% prefer to select investment funds/ accounts on their own
    • Those who preferred to have someone manage their investments
      • 40% preferred target risk funds handled by a fund manager
  • Benefits
    • Increase of Available Benefits from Employer since 4th Quarter 2005
      • Health insurance, defined contribution, life insurance and free parking
    • Rank of Most Important Benefits
      • Health insurance the most important
      • Defined contribution
      • Defined benefit
      • Disability insurance
    • Benefit that Needs Improvement
      • Health insurance

View questions and data

Retirees Only

  • Frequency of Boredom in Retirement
    • 52% say "almost never"
    • 22% responded "seldom"
    • 26% responded "sometimes", "often", or "almost always"

View questions and data

1) The Principal ranks number one in plans administered - 2006 Spectrum Group analysis of fully-bundled 401(k) providers.

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