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The Principal Financial Well-Being IndexSM Index Summary - 3rd Quarter 2009

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 July 30 to August 11, 2009 among 1147 employees and 558 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, 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: 107 KB) - includes all questions and data

Featured Key Findings

  • Financial Well Being - A total of 66% of employees are concerned about their long-term financial future, while 60% of retirees share this concern. When asked to identify the one issue that keeps them awake at night, the issue of most concern to employees is being able to afford/pay for the basic necessities (35%). When having to select only one issue, the issue selected by the most retirees was also being about to afford/pay for the basic necessities (25%) though it was selected by significantly fewer retirees than employees.
  • Economy - Just less than six out of ten retirees (56%) and employees (59%) have reduced their overall spending to some degree in the past two months due to the economy. Significantly fewer employees have reduced their overall spending a little compared to 2nd quarter of 2009.

Employees Only

  • Benefit Availability and Enhancement - The most commonly offered benefits by small to medium sized employers include health insurance (93%), dental insurance (76%), life insurance (68%), defined contribution plans (63%), free parking (63%) and disability insurance (46%). Defined benefit plans (23%), profit sharing/bonus (13%), and flex time (12%) were the benefits that employees would most like to see added to their employer offered benefit package. Health insurance (43%) and defined contribution plans (15%) top the list of benefits that employees most wish their company would improve upon.
  • Benefit Satisfaction and Importance - Employees are most satisfied (rating of 8, 9 or 10 on a 10 point scale) with their defined benefit plan (64%), disability insurance (56%), defined contribution plan (55%) and life insurance (53%). Health insurance topped the list of benefit importance with almost 9 out of 10 employees (87%) rating this as at least an "8" in terms of importance.
  • 401(k) Changes - Employees participating in their employer's defined contribution plan (81%) were asked what changes they have made, if any, to their 401(k) account in the past 6 months due to current economic conditions.
    • Twenty-four percent indicated they have made some type of change to their 401(k) - 11% have increased the amount they are contributing to their 401(k), 8% have decreased the amount they are contributing to their 401(k), 3% have taken out a loan from their 401(k) account, 3% have stopped contributing to their 401(k) account and 2% have taken out a hardship withdrawal (note percentages exceed 24% due to some employees making multiple changes).
    • Employees who have made changes to their 401(k) account have made these changes most commonly to pay down debt (40%), to pay daily expenses (33%), or to build up their savings accounts (19%).
  • Retirement Savings Recovery - Employees who are saving for retirement were asked how long they thought it would take for their retirement account to recover to the balance they had at the beginning of January 2008. The percentage of employees who say their balance is the same or higher than it was on Jan. 1, 2008 has doubled from last quarter (18% vs. 9%). The percentage of employees who feel it will take less than 2 years to recover has increased significantly from last quarter (16% vs. 11%) There has also been a significant increase in the percentage of employees who are not sure how long it will take (20% vs. 12%) Only 2% of employees think they will never recover their account balance.
  • Adjusted Retirement Date - Employees were asked if they have adjusted when they plan to retire given current economic conditions. Half of the employees are not sure when they will retire. Twelve percent of the employees said they have delayed their planned retirement date. When asked how long they expected their retirement to be delayed, 40% responded it would be delayed by six years or more.
  • Plan For Retirement - Aside from knowing if their retirement will be delayed, employees were also asked if they had a plan for how they will transition their retirement savings into a steady stream of income in retirement. The majority of employees (83%) said they do not have a plan for the transition. Employees with a plan for transitioning their retirement into a steady stream of income were asked if they have a written plan. Approximately four in ten (43%) have an actual written plan.

Retirees Only

  • Retirement Income Planning - Over four in ten (44%) retirees said they began to think about managing their spending and investments in retirement more than 10 years prior to their retirement. Retirees were asked when they would have started learning more about spending and investing in retirement if they could do it over again. While only 44% of retirees said they actually did this learning more than 10 years prior to retirement, 73% said they would do it more than 10 years prior to retirement if they could do it over again. Surprisingly, ten percent of retirees did not start thinking seriously about how to manage their spending and investments in retirement until they were retiring.

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