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The Principal Financial Well-Being Index^SM Employee Questions - Second Quarter 2007

Employee Financial Well Being

In measuring employees' and retirees' attitudes and perceptions about their financial well-being, a series of different questions were asked of them. They 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 (63%) are significantly more likely than retirees (48%) to be concerned about their long-term financial future. However, a significantly smaller number of employees (63%) this year are concerned about their long-term financial future than last year at this time (68%).

Almost half (45%) of the retirees are extremely happy about their current financial well-being compared to 31% of the employees. There are significant differences between responses from retirees and employees – indicated with "sig" below.

A significantly smaller percentage of employees (24%) this year say they have not yet planned for retirement savings and security than last year at this time (30%).

Table 1
"Please indicate the extent to which you agree or disagree with the following statements…"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Agree/Disagree (% of respondents agreeing completely or somewhat)	2 Qtr 2007		2 Qtr 2006		2 Qtr 2005	2 Qtr 2004	2 Qtr 2003	2 Qtr 2002	2 Qtr 2001
	Retiree	EE	Retiree	EE	EE	EE	EE	EE	EE
I am very concerned about my long-term financial future.	48%sig	63%SIG	48%	68%	74%	76%	73%	78%	84%
I am extremely happy about my current financial well-being.	45%sig	31%	45%	30%	29%	28%	28%	27%	24%
I have not yet planned for retirement savings/security.	N/A	24%SIG	N/A	30%	29%	24%	26%	28%	27%

SIG – varies significantly (95% level) from previous results employee comparison
sig – varies significantly (95% level) from retiree and employee comparison

Retiree Healthcare Benefits

Retirees (53%) are significantly more likely than employees (22%) to have worked for an employer that offers retiree healthcare benefits. Employees are much more likely than retirees to be unsure of whether or not they have or do work for an employer that offers retiree healthcare benefits.

Employees and retirees who have access to retiree healthcare benefits were asked if they had any safety nets in place in the event that the employer eliminates the benefit. Approximately one out of three employees and retirees have no safety net in place. The top four safety nets in place for retirees and employees are savings account, retirement nest egg, home equity and selling liquid assets. Employees are significantly more likely than retirees to say they would forgo elective medical procedures.

Table 2
"Does your current or past employer offer retiree healthcare benefits?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Retiree Healthcare Benefits	2 Qtr 2007 Retiree	2 Qtr 2007 EE
Yes	53%sig	22%
No	42%	50%
Not Sure	5%sig	28%
	N=548	N=1137

SIG – varies significantly (95% level) from retiree and employee comparison

Table 3
"What type of safety net do you have in place if your employer/past employer eliminates your retiree healthcare benefits? Please select all that apply"
Base: employees and retirees who have retiree healthcare benefits

Type of safety net in place	2 Qtr 2007
Type of safety net in place	Retiree	EE
Savings account	30%	37%
Retirement nest egg	32%	36%
Home equity	32%	31%
Sell liquid assets (stocks, bonds, mutual funds)	34%	24%
Forego elective medical procedures	8%sig	18%
Borrowing from family and friends	1%sig	9%
Other	15%	9%
I have no safety net in place currently.	28%	33%
	N=321	N=262

SIG – varies significantly (95% level) from retiree and employee comparison

Financial Planning Information

Employees and retirees were asked how they prefer to receive information about financial planning. Approximately four in ten employees and retirees prefer print information. Female employees are significantly more likely than male employees to prefer printed information (42% vs. 32%). Employees are significantly more likely than retirees to prefer one-on-one meetings, email communications, or group meetings. Email communication has varying levels of preference depending on age. Employees age 44 and under are significantly more likely than employees 45 and older to prefer email communication.

Table 4
"How would you prefer to receive information about financial planning?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Financial Planning Information	2 Qtr 2007 Retiree	2 Qtr 2007 EE
One-on-one meetings	26%sig	39%
Print information	37%	37%
Email communications	18%sig	31%
>Group meetings	7%sig	16%
Representatives by telephone	3%	3%
Other	27%sig	6%
	N=548	N=1137

SIG – varies significantly (95% level) from retiree and employee comparison

Home Improvements

Approximately one-third of the retirees and almost half of the employees surveyed are planning to do home improvements this summer. The majority of retirees and employees will be using money from savings to pay or help pay for the home improvements. Credit cards and home equity loans will also be used to finance the home improvements.

Table 5
"Are you planning to do any home improvement projects this summer?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Planning home improvement projects	2 Qtr 2007 Retiree	2 Qtr 2007 EE
Yes	35%sig	45%
No	65%sig	55%
	N=548	N=1137

Table 6
"How do you plan to pay for the home improvement projects? Please select all that apply."
Base: employees and retirees who plan to do a home improvement project this summer

How to pay for home improvement projects	2 Qtr 2007 Retiree	2 Qtr 2007 EE
Savings	73%	63%
Credit Card	13%	16%
Home Equity Loan	11%	12%
Tax Refund	4%	11%
Personal Loan	2%	2%
Loan from retirement account	1%	2%
Other	16%	19%
	N=189	N=511

Financial Analysis of Coverage

Two out of three retirees and employees responded they have not had a financial analysis of any of several financial planning areas listed within the past three years. The good news is the percentage has declined significantly since 2006 for both retirees and employees. Retirement savings was listed by retirees and employees most often, as the item that has been reviewed for adequacy within the past three years. Employees aged 18-34 were significantly less likely than any other age group to have had a financial analysis done on their retirement savings.

Table 7
"In the past 3 years, have you had anyone conduct financial analysis to determine the adequacy of your coverage in any of the following areas? Please select all that apply."
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Financial Analysis of Coverage	2 Qtr 2007		2 Qtr 2006		2 Qtr 2003
Financial Analysis of Coverage	Retiree	EE	Retiree	EE	EE
Retirement Savings	26%*	25%SIG	20%	19%	21%
Life Insurance (survivor benefits)	11%	15%	13%	13%	19%
Savings Goals	9%	14%	8%	12%	14%
Estate Planning	15%sig	8%SIG	13%	5%	9%
Disability Income Protection	4%	7%SIG	6%	5%	8%
Education Funding	1%sig	5%	2%	5%	6%
None of these	67%*	66%SIG	73%	73%	69%
	N=548	N=1137	N=638	N=1100	N=1216

SIG – varies significantly (95% level) from previous results employee comparison
sig – varies significantly (95% level) from retiree and employee comparison
* - varies significantly (95% level) from previous results retiree comparison

American Dream

Employees and retirees were asked if they feel the American Dream has been or will be harder to achieve than it was for their parent's generation. Over half (56%) of the employees agree it has been or will be harder to achieve compared to only 37% of the retirees. The results this year are significantly different from results in third quarter of 2005 when 70% agreed it has been or will be harder for them to achieve the American dream than it was for their parent's generation.

Table 8
"The notion of "The American Dream" has involved holding a good job, owning a home, living in a secure community, and sending the children to a good school. To what extent do you agree with the following phrase: The American Dream has been or will be harder for me to financially achieve than it was for my parent's generation."
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Agree/Disagree	2 Qtr 2007		3 Qtr 2005
Agree/Disagree	Retiree	EE	EE
Agree completely	17%sig	31%SIG	40%
Agree somewhat	20%	25%SIG	30%
Neither agree nor disagree	24%sig	17%	15%
Disagree somewhat	22%	19%SIG	10%
Disagree completely	17%sig	strong>8%SIG	5%

SIG – varies significantly (95% level) from previous results employee comparison

Retiree Basic Necessities

Employees and retirees were asked what they would do if they were retired and realized they didn't have enough savings to pay for basic necessities. The most frequently given response by either group was to go back to work, with 91% of the employees saying they would go back to work compared to only 57% of the retirees. Getting a reverse mortgage was mentioned by significantly more retirees (35%) than employees (20%) as was relying on children, family and friends to make ends meet and declaring bankruptcy. This question was also asked in 2006 and retirees responded with significant differences. Results show that retirees are significantly more likely this year to do all of the items listed than they were last year at this time.

Table 9
"What might you do as a retiree if you realized you did not have enough savings to pay for the basic necessities? Please select all that apply"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Do not have enough savings	2 Qtr 2007		2 Qtr 2006
Do not have enough savings	Retiree	EE	Retiree	EE
Go back to work	57%sig*	91%	47%	90%
Get a reverse mortgage	35%sig*	20%	28%	18%
Rely on my children, family and friends to make ends meet	15%sig*	7%SIG	9%	11%
Declare bankruptcy	11%sig*	6%SIG	6%	9%
Other	21%sig*	8%SIG	30%	11%

Pre-retirement Income

Employees and retirees were asked how much of their pre-retirement income will most likely be needed to maintain their current lifestyle as a retiree. There are significant differences in the employee and retiree responses when compared with last year's results as shown in Table 10. Additionally, compared to all other age categories, significantly more employees age 18-34 feel they will need 90% or more of their pre-retirement income to maintain their current lifestyle.

Table 10
"How much of your pre-retirement income will you most likely need as a retiree to maintain your current lifestyle?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Pre-retirement income needed	2 Qtr 2007		2 Qtr 2006
Pre-retirement income needed	Retiree	EE	Retiree	EE
Less than 50%	18%sig	7%	21%	7%
50%-64%	28%*	28%SIG	21%	18%
65%-79%	27%*	31%	16%	32%
80%-89%	15%	19%SIG	15%	24%
90% or more	13%*	15%SIG	27%	20%

Rising Fuel Costs

Employees and retirees were asked if the rising cost of fuel had influenced various activities in their lives. As illustrated in table 11, there are significant differences in how it is impacting retirees and employees when compared to last year. Significantly fewer employees this year than last year say it has impacted holiday vacation plans, automobile purchasing decisions, and the grade of fuel used. However, it is still influencing nearly three out of ten employees' and retiree's automobile purchasing decisions and holiday vacation plans. Almost four in ten retirees responded that it has made no impact.

There are some differences in results based upon region of the country. Employees in the South are significantly more likely than employees in other regions of the country to say it has impacted holiday vacation plans.

Significantly more people in the West than any other region say it has impacted their decision to carpool or use an alternative means of transportation.

Table 11
"Has the rising cost of fuel influenced any of the following in your life? Please select all that apply."
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Cost of fuel	2 Qtr 2007		2 Qtr 2006		3 Qtr 2005
Cost of fuel	Retiree	EE	Retiree	EE	EE
Automobile purchasing decisions	29%	33%SIG	31%	38%	32%
Holiday vacation plans	28%*	29%SIG	34%	40%	41%
The decision to carpool or use alternate means of transportation on a given day	9%sig	18%	7%	16%	17%
Other	22%*	18%	30%	21%	14%
Grade of fuel used	9%	14%SIG	11%	18%	19%
The rising cost of fuel has made no impact on my lifestyle	39%sig*	29%	33%	27%	29%
	N=548	N=1137	N=638	N=1100	N=1147

Summer Vacation Plans

Employees and retirees were provided with a list of things that could potentially impact their summer plans. Rising fuel prices were listed by approximately half of the retirees (46%) and employees (47%) as something they fear that could potentially impact their summer vacation plans. Almost half of the employees (47%) also fear not having enough money saved for vacation could impact their plans. More so than any other age group, not having enough money saved for vacation is the primary concern for employees age 18-34 (62%). Almost four in ten employees fear they may be too busy at work which could impact their summer vacation plans.

Four in ten retirees have no fear that anything will impact their summer vacation plans, more so than employees.

Table 12
"Which of the following do you fear could potentially impact your summer vacation plans? Please select all that apply"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Impact your summer vacation plans	2 Qtr 2007
Impact your summer vacation plans	Retiree	EE
Rising fuel prices	46%	47%
Having enough money saved for vacation	23%sig	47%
Too busy at work	N/A	38%
Loss of job	N/A	15%
Job switch	N/A	12%
Airline delays/cancellations	12%	11%
Other	7%	6%
I have no fear that anything will impact my summer vacation plans.	40%sig	17%
	N=548	N=1137

SIG – varies significantly (95% level) from retiree and employee comparison

Years in Retirement

Retirees plan to spend significantly more years in retirement (24.6 average) than employees (21.4 average). Employees age 55 and up plan to spend significantly fewer years in retirement compared to employees in other age groups as seen in table 14.

Table 13
"How many total years do you plan to spend in retirement?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Total years	2 Qtr 2007		2 Qtr 2006
Total years	Retiree	EE	Retiree	EE
0-10 years	10%sig	18%SIG	10%	23%
11-20 years	33%sig	42%	31%	39%
21-30 years	42%sig*	31%SIG	36%	26%
31-40 years	11%sig*	5%SIG	16%	7%
41-50 years	2%*	3%	5%	2%
51 or more years	1%	1%	2%	2%
Average Years in Retirement	24.6sig*	21.4	26.2	21.1

Table 14
"How many total years do you plan to spend in retirement?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees

Total years	2nd Qtr 2007 Employee Current Age
Total years	18-34	35-44	45-54	55+
0-10 years	18%	17%	16%	24%
11-20 years	38%	43%	39%	54%
21-30 years	33%	32%	37%	18%^
31-40 years	8%	6%	2%	2%
41-50 years	3%	2%	5%	2%
51 or more years	<1%	1%	<1%	1%
Average Years in Retirement	22.2	21.6	22.2	18.7^
	N=423	N=270	N=245	N=199

^ – varies significantly (95% level) from all other age groups

Retirement Spending

Retirees and employees were told to assume they had $100,000 in savings and asked how much they could spend from that each year in retirement and be confident they would not run out of money. The largest portion of retirees (36%) and employees (36%) responded with the lowest response of $4,000. There were no significant differences this year in responses between employees and retirees. However, when compared with last year's retiree results, a significantly larger percentage of retirees responded that they could take out $8,000 or $10,000 per year in retirement and not run out of money.

Table 15
"If you had $100,000 in savings, how much could you spend from that each year in retirement and be confident that you would not run out of money?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Spend from savings	2 Qtr 2007		2 Qtr 2006
Spend from savings	Retiree	EE	Retiree	EE
$4,000	36%	36%	41%	34%
$6,000	20%*	21%	25%	22%
$8,000	18%*	18%	13%	16%
$10,000	17%*	15%SIG	12%	20%
Over $10,000	9%	10%	10%	9%

Table 16
"Approximately how often each year do you do each of the following check-ups?"
Base: 1137 employed U.S. adults in firms of 10-1,000 employees and 548 retirees

Check-ups		4 times or more		3 times		2 times		1 time		Less than 1 time		Never
Check-ups		Retiree	EE	Retiree	EE	Retiree	EE	Retiree	EE	Retiree	EE	Retiree	EE
Car Check-up	2006	39%	54%	19%	24%	19%	13%	10%	4%	3%	2%	9%	4%
Car Check-up	2007	33% sig*	50%	27%*	23%	25% sig*	15%	6%*	5%	3%	3%	5%*	4%
Financial Planning Check-up	2006	10%	4%	2%	2%	9%	5%	15%	17%	19%	26%	44%	47%
Financial Planning Check-up	2007	5%*	4%	2%	2%	10%sig	6%	23% sig*	16%	20%sig	33%SIG	41%	40% SIG
Dental Health Check-up	2006	6%	3%	6%	5%	28%	41%	22%	18%	20%	27%	17%	8%
Dental Health Check-up	2007	7%	5% SIG	7%	4%	35% sig*	45%	16%*	20%	21%	20%SIG	14%sig	5% SIG
Heater/Air conditioner Check-up	2006	1%	1%	1%	1%	14%	9%	39%	30%	26%	32%	19%	26%
Heater/Air conditioner Check-up	2007	<1%	1%	2%	1%	17%sig	9%	38% sig	26%SIG	30%	34%	13%sig*	29%
Medical Check-up	2006	29%	10%	9%	6%	19%	14%	31%	39%	10%	26%	2%	6%
Medical Check-up	2007	32%sig	10%	11%sig	5%	20%sig	13%	31% sig	44%SIG	5%sig*	22%SIG	2%sig	6%
Vision Check-up	2006	2%	<1%	2%	1%	15%	4%	47%	45%	32%	41%	2%	8%
Vision Check-up	2007	3%sig	1%	3%sig	1%	11% sig*	4%	53% sig*	41%	30%sig	42%	1%sig	13% SIG

The Principal Financial Well-Being IndexSM Employee Questions - Second Quarter 2007

Employee Financial Well Being

Retiree Healthcare Benefits

Financial Planning Information

Home Improvements

Financial Analysis of Coverage

American Dream

Retiree Basic Necessities

Pre-retirement Income

Rising Fuel Costs

Summer Vacation Plans

Years in Retirement

Retirement Spending

The Principal Financial Well-Being Index^SM Employee Questions - Second Quarter 2007