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The Principal Financial Well-Being IndexSM Index Summary - 4th 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 October 20th and October 30th, 2009 among 1,120 employees and 602 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: 133 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.
    • Due to current economic conditions, nearly half of employees (46%) indicated they would be scaling back on the number of people for which they buy gifts and nearly the same percentage (45%) indicated they would be spending less per gift this holiday season.
    • A quarter of employees said they would be traveling less this holiday season.
    • At least a quarter of retirees responded they would either be spending less per gift (36%), scaling back on the number of people for whom they buy gifts (30%), or donating less to charities (27%) this holiday season.
    • Just under half of both employees and retirees (46% for both groups) plan to spend less money than they did last year for the holidays.
    • The majority of both retirees (69%) and employees (59%) plan to spend less than $500 this holiday season.
  • New Year's Resolutions - Employees and retirees were given a list of potential financial resolutions and asked which they intended to make for 2010.
    • Similar to last year, the top two resolutions selected by employees were paying off credit card debt (33%) and putting a set amount of money into savings each month (32%).
    • Retirees were most likely to select pay off credit card debt (19%) or put a set amount of money into savings each month (19%, up significantly from 12% in 2008).
    • The majority of both employees (74%) and retirees (79%) said they would pay closer attention to making their New Year's financial resolutions this year as a result of the past year's economic and stock market turmoil.
  • Economic Perceptions - Employees and retirees were asked if they feel better off financially than they were at the beginning of the year as we approach the end of 2009, as well as how they would describe their sentiment about the economy and an improvement in the economic downturn as they look to the New Year.
    • Over a third (37%) of employees and significantly fewer (24%) retirees said they feel better off financially now than they did at the beginning of 2009.
    • Just about half of retirees (48%) and slightly fewer employees (44%) described their sentiment as "cautious", while three out of ten employees (31%) and two out of ten retirees chose "optimistic" to describe their sentiment towards the economy and an improvement in the economic downturn in the New Year.
    • Only 17% of employees and just about a quarter (24%) of retirees had a pessimistic view of the economy in the New Year.
  • Economy's Impact on Spending - Employees and retirees were asked a number of questions regarding how the economy has affected their spending behavior.
    • When asked how the current economy has impacted their overall spending in the past two months, two-thirds of employees and 58% of retirees have reduced their overall spending to some degree. In addition, the majority of both employees (74%) and retirees (77%) said they will continue to spend less after the economic downturn comes to an end.
    • Over half of employees (56%) and 43% of retirees are preparing more meals at home instead of eating out. Lowering the thermostat at home was also commonly selected by over a third of retirees and employees. A third of employees indicated they have started bringing their lunch to work, while over a quarter of both retirees (26%) and employees (27%) have started to shop in their own closet instead of making new purchases. The overwhelming majority of both employees (98%) and retirees (97%) said they would continue to make some (50% of employees; 38% of retirees) or even all of these changes (48% of employees; 59% of retirees) after the economic downturn is over.
  • Financial Tracking - The top method employees use to track their finances is online bank statements (59%), followed by check registers (43%), debit card receipts (30%), and paper bank statements (30%). Retirees' top methods are online bank statements (56%) or check register (56%), followed by paper bank statements (42%) and debit card receipts. Over half of employees (59%) and retirees (53%) are tracking their finances more closely as a result of the recent economic downturn.
  • Financial Well Being - For both employees and retirees, the top factor affecting their financial well-being in the last decade was the surge in the price of gasoline in the summer of 2008. Other commonly chosen factors for both groups were the real estate market decline over the last three years and the Dow Jones Industrial Average dropping below 7,000 points in March of 2009. Employees' and retirees' top financial lesson to be learned from the past decade was having an emergency fund in the event of unforeseen illness, disaster, or job loss. The second most popular financial lesson for both groups was paying off debts.

Employees Only

  • Retirement Savings - Employees were asked what percentage of their pay they are currently saving for their retirement. Employees were then asked what percentage of their pay they think they need to be saving in order to have enough income during their retirement. Nearly half of employees (46%) are currently saving 1%-8% of their pay; however, only 19% of employees think they need to save 1%-8% of their pay to have enough income in retirement. Furthermore, 31% of employees are currently saving 9% or more for their retirement while over half (54%) think they need to be saving at least 9% in order to have enough income in retirement. A quarter of employees said they are not sure how much of their pay they need to be saving in retirement to ensure they have enough retirement income.
  • Job Security - Job security continues to top the importance chart when compared to long-term financial future and challenging work. Three out of ten employees expressed some level of concern over their personal job security. Also, 47% of employees are concerned their company will reduce the number of employees in the next year.
  • Employee Benefits - Employees continue to rate health insurance as the most important benefit, followed by defined contribution retirement plans 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.

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