The Principal Financial Well-Being IndexSM Index Summary - Fourth 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 October 22nd and October 29th, 2008 among 1,179 employees and 625 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.
Download the Full Report (PDF: 279 KB) - includes all questions and data
Featured Key Findings
- Holiday Spending - Employees and retirees were asked about their intentions for spending in the upcoming holiday season. Up significantly from fourth quarter 2007, just about half of the employees (53% versus 29% in 2007) and retirees (49% versus 29% in 2007) plan to spend less money this holiday season than last year. Just about half of employees indicated they would be spending less per gift (52%) or scaling back on the number of people for whom they buy gifts this holiday season (49%). Approximately a third of employees (35%) said they would be traveling less this holiday season while another quarter indicated they would be donating less to charities.
- New Year’s Resolutions - Employees and retirees were given a list of potential financial resolutions and asked which they intended to make for 2009. The top two resolutions selected by employees were paying off credit card debt (35%) and putting a set amount of money into savings each month (31%). Retirees were most likely to select pay off credit card debt (17%) or reduce spending by a specific amount each month (17%, up significantly from 11% in 2007).
- Economy - When asked how the current economy has impacted their overall spending in the past two months, over a third of retirees (39%) and nearly as many employees (31%) said their spending has remained about the same. Nearly six out of ten retirees (59%) and two thirds of employees have reduced their overall spending to some degree.
- Monthly Budget - Over six out of ten of employees (64%) and retirees (63%) who have a budget indicated they have made changes to their budget due to fears of the economy, their job stability or rising prices. Those with a monthly budget were also asked if they have cut any specific expenses from their monthly budget. The most common expense cut by both employees (27%) and retirees (31%) was media subscriptions such as newspapers and magazines. Employees were also likely to mention cutting gym memberships (14%), landline telephones (13%), and lawn services (12%).
- Emergency Fund - Approximately seven out of 10 retirees (69%) and over half of the employees (56%) have an emergency fund of money they can immediately access if necessary. Almost one in five employees (17%) and 13% of retirees who have an emergency fund said they have had to tap into their emergency fund recently to cover monthly expenses.
- Financial Well Being - Employees (73%) are significantly more likely to be concerned about their long-term financial future than retirees (62%). The percentage of retirees (62%) who are concerned about their long-term financial future is up significantly from 4th quarter of 2007 (44%). Just over a quarter of both retirees and employees (28%) are extremely happy about their current financial well-being. Significantly fewer retirees this year (28% versus 50% in 2007) are happy about their current financial well-being. Just over a quarter of employees (28%) have not yet planned for retirement savings and security.
Employees Only
- Job Security - Job security continues to top the importance chart when compared to long-term financial future and challenging work. Three out of ten (31%) employees expressed some level of concern over their personal job security. Also, 41% of employees are concerned their company will reduce the number of employees in the next year, up significantly from a quarter of employees in 2007. Just under half of the employees (44%) have no concerns about the future of their company.
- Second Job - Employees were asked if they have taken out a second job, or considered doing so, in order to make ends meet during this time of economic slow down and rising costs. Only 8% of employees have actually done this, but over a third (36%) are considering doing so.
- 401(k) Changes - Employees participating in their employer’s defined contribution plan were asked what changes they have made, if any, to their 401(k) account in the past 6 months due to current economic conditions. Ten percent indicated they have made some type of change to their 401(k) – 4% have decreased the amount they are contributing to their 401(k), 5% have taken out a loan from their 401(k) account, 1% have taken out a hardship withdrawal, and 1% have stopped contributing to their 401(k) account (note percentages exceed 10% due to some employees making multiple changes to their 401(k)). Employees who have made changes to their 401(k) account have made these changes most commonly to pay down debt (46%) or to pay daily expenses (34%).
- Benefits- Employees continue to rate health insurance as the most important benefit, followed by defined contribution and dental insurance. Health insurance is the benefit most employees would like to see improved, while defined benefit plans is the benefit most employees would like to see their employer offer.
- Health Plan Options - Forty-two percent of employees have more than one health plan option available. Consistent with 2007, 11% of employees report their employer does not offer health insurance. The larger the firm, the more likely there are multiple health plans available. Firms with 10 to 500 employees are significantly more likely to offer no health options or only one option. In contrast, firms with 501 to 1,000 employees are more likely to offer 3 health plan options or 4 or more health plan options.
- Anticipated Medical Insurance Changes - Employees who are offered health insurance were asked what they anticipate will happen with their insurance in 2009. Sixty-six percent expect their premiums will increase, 43% expect their deductibles will increase, 27% expect a reduction in coverage and 23% expect their medical plan options will change.
