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The Principal Financial Well-Being IndexSM Index Summary - First Quarter 2008

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 January 28 to February 3, 2008 among 1,316 employees and 589 retirees. 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.

Employees consisted of adults 18+ who work at small and mid-sized (SMB) U.S. businesses (firm size 10-1,000 employees). Retirees consisted of adults age 60+ who reported they are retired or those who are employed part-time or self-employed and have retired from a previous career. Results were weighted as needed for age by gender, education, race/ethnicity, education, region and household income. Propensity score weighting was also used to adjust for respondents' propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words "margin of error" as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the entire population of adult employees working for small to mid-sized U.S. businesses and retirees. Because the sample is based on those who agreed to be invited to participate in the Harris Interactive online research panel, no estimates of theoretical sampling error can be calculated.

Key Findings

Employee and Retiree Comparisons

  • Politics – Respondents were asked a series of questions regarding the upcoming 2008 presidential election. They were asked to select the candidate (from a list of potential candidates) they believed would help improve their and their family's financial well-being, create the most jobs for the country and be best at ensuring availability of affordable health care to all Americans.
    • In regards to improving employees' financial well-being, Hillary Clinton (17%) and Barack Obama (16%) are in a tight race. Among retirees, Hillary Clinton (22%) was selected as the candidate that would best improve their and their family's financial well-being; Barack Obama (11%) was the next most selected candidate by retirees.
    • In terms of job creation for the country, Hillary Clinton (17%) and Barack Obama (17%) were equally selected by employees. For retirees, Hillary Clinton (22%) was the top candidate for job creation, with John McCain (10%) coming in second.
    • Among retirees, Hillary Clinton (34%) was the most commonly selected candidate for ensuring the availability of affordable health care to all Americans. Barack Obama (10%) was the next most commonly selected candidate for retirees. Employees' top selections for ensuring the availability of affordable health care for all Americans was Hillary Clinton (26%) and Barack Obama (18%).
    • For all three issues, at least a quarter of both retirees and employees were undecided on which candidate would be best at addressing each issue.
  • State of the Economy – Employees and retirees were asked about their thoughts on the current state of the economy. Four out of ten retirees (41%) and employees (42%) think we are currently in a recession. These are significant increases from 4th quarter of 2007 when only 24% of retirees and 21% of employees believed we were in a recession. Nearly half of retirees (45%) and employees (46%) fear we are heading in the direction of a recession.
    • Respondents who do not believe the U.S. is currently in a recession were asked how likely it is that the nation will go into an economic recession some time in 2008. Fifty-nine percent of employees and 44% of retirees believe it is either somewhat likely or very likely that the nation will go into a recession some time this year.
    • At least a third of both retirees (39%) and employees (33%) believe the Democratic Party is best prepared to deal with the economy in the event of an economic recession. Just about a quarter of both retirees (26%) and employees (24%) believe the Republican Party is better suited to deal with the economy if a recession were to occur. Another quarter or so of retirees (23%) and employees (24%) said neither party.
    • Over a third of employees (38%) and almost half of retirees (48%) believe their current financial well-being is worse now than it was when President Bush went into office. Another third or so of the employees (35%) and 40% of retirees believe their financial well-being is about the same now. Only 12% of retirees and 26% of employees believe their financial well-being is better now.
  • Managing Money in Retirement – The majority of retirees (63%) are managing their retirement money on their own. Employees are less likely than retirees to manage their money on their own in retirement, as significantly fewer employees (41%) plan to manage their own money in retirement.
  • Financial Planning Services – Employees and retirees were asked whom they would normally go to first for financial advice. The single response given by the largest portion of retirees (29%) was that they don't seek advice from other individuals. The largest portion of employees (30%) said they would go first to family or friends.
  • Income Tax Refunds – Eighty-three percent of employees expect to receive a tax refund for 2007, while significantly fewer retirees (46%) expect a refund. When asked what they plan to do with the refund, significantly more employees (45%) than retirees (16%) plan to pay down or pay off short-term debts. Four in ten retirees and employees plan to save or invest their refund.
  • Relationship between Financial Health and Physical Health – There appears to be a positive relationship between self-reported financial health and self-reported physical health.
    • Significantly more retirees (37%) rated their financial health as healthy compared to employees (27%). In contrast, significantly more employees (54%) rated their physical health as healthy compared to retirees (43%).
    • Of the employees (n = 340) classified as "Financially Healthy", 81% indicated they were "Physically Healthy".
    • Of the retirees (n = 230) classified as "Financially Healthy", 68% reported themselves as "Physically Healthy".

View questions and data

Employees Only

  • Benefits – The availability of defined benefit plans has increased significantly when compared to 1st quarter 2007. Employees continue to rate health insurance as the most important benefit, followed by defined contribution plans, dental insurance, defined benefit plans and disability insurance. Health insurance is the benefit most employees would like to see their company improve upon.
  • Health Coverage Changes – Nearly half of employees (46%) have not seen health coverage changes in the past 12 months. At least three out of ten employees have seen increased employee co-pays (35%) and increased employee deductibles (31%).
  • Benefits for Recruiting and Retention – About two thirds of employees (64%) agree that having a good employee benefits plan encourages them to work harder and perform better and an equal percentage agree that having a good employee benefits plan keeps them working for their current company.
  • Job Security – Job security continues to top the importance chart when compared to long-term financial future and challenging work. Nearly half (49%) of employees ranked job security as most important to them.
  • Corporate Bonuses – Nearly three out of ten employees (28%) received a corporate bonus for 2007. The bonus was most often used to pay down or pay off short term debts (33%), purchase gifts during the holiday season (32%) and saved or invested (29%), similar to last year's responses.
  • 401(k) Deferral – Eighty-two percent of employees are currently participating in defined contribution plan. However, 17% of these employees say they do not currently defer any of their salary. Thirty percent contribute between 1 - 5% of their salary. Thirty-one percent contribute 6 - 10% of their salary. Only 15% contribute 11% of their salary or more. In contrast, 43% say they should be deferring 11% or more of their salary in order to be comfortable in retirement.
  • Employees Not Offered 401(k) Plan – Employees whose employer does not offer a 401(k) plan were asked how they are saving for retirement. The most commonly selected modes of retirement saving included checking accounts/savings accounts (47%), IRAs (33%), and mutual funds (28%).
    • One out of five employees not offered a 401(k) plan through their employer reported that they are not saving for retirement at all. When asked what it would take to get them to save for retirement, 74% said they are not able to save for their retirement right now under their financial circumstances.
  • 401(k) Automatic Enrollment – Twenty-one percent of employees working at firms with 10-1,000 employees indicated that their employer offers automatic enrollment. Forty-eight percent of employees surveyed agree completely or somewhat that all eligible employees should be auto-enrolled.
  • Disability Income Insurance – Employees were asked a number of questions related to their knowledge of individually purchased disability income insurance.
    • Respondents were provided a list of potential things (see a doctor for stress, anxiety or depression, are involved in a motor vehicle accident, suffer a bad back, become seriously ill or die) that could happen and asked which is most likely to happen over the course of a year. Approximately seven out of ten employees (69%) said none of these things are most likely to happen; this is a significant increase from 1st quarter of 2006 when a little over half (51%) indicated none of these things were likely to happen.
    • Forty percent of employees feel not at all knowledgeable about individually owned disability insurance.
    • Eighteen percent of employees personally own a disability income insurance policy on themselves, a significant increase from 1st quarter 2006 when 13% reported owning such a policy.

View questions and data

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