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The Principal Financial Well-Being IndexSM Trending - Summary 1st Quarter 2010

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 27th and February 8th, 2010 among 1,067 employees and 614 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: 131 KB) - includes all questions and data

Featured Key Findings

  • Financial Well Being - Two-thirds of employees are very concerned about their long-term financial future, slightly less than in 4th quarter of 2009 (71%). Nearly the same percentage of retirees (64%) is very concerned about their long-term financial future; up significantly from 4th quarter 2009 (56%).
  • Improving/Rebuilding Financial Well Being - Employees and retirees were asked what steps they have taken to improve or rebuild their financial well being since the recession began in 2008. The top selections were spent less money (62% of employees; 54% of retirees), paid down debt (45% of employees; 29% of retirees), and increased savings for an emergency fund (22% of employees; 14% or retirees). Almost one out of five (18%) employees also indicated they have increased their retirement savings since the recession began in 2008.
  • Economy's Impact on Spending and Other Financial Behavior - Employees and retirees were asked a number of questions regarding how the economy has affected their financial behavior.
    • When asked how the current economy has impacted their overall spending in the past two months, nearly two-thirds (64%) of employees and six out of ten retirees have reduced their overall spending to some degree.
    • Nearly two-thirds of retirees (65%) and slightly fewer employees (62%) have not made any changes, nor do they plan to make any changes, in response to the current low interest environment. Sixteen percent of retirees have invested in shorter-term CDs rather than long-term investments. Ten percent of employees have refinanced their mortgage while another 10% of employees have moved their savings to a higher interest savings account.
    • In terms of confidence in the long-term benefits of investing in the bond and stock markets, retirees are most likely to categorize their confidence in such benefits as "low" (54%), preferring bank CDs, money markets or other short-term investments. Employees are most likely to categorize their confidence as "moderate" (46%), feeling more comfortable investing in the bond and stock market, but not completely comfortable.
  • Healthcare Reform - Over half of both employees (55%) and retirees (54%) think healthcare reform will have a direct impact on their personal health insurance costs. Of those who believe their healthcare costs will be affected, 79% of retirees and significantly fewer employees (62%) think their costs will go up significantly. The vast majority of both retirees (86%) and employees (83%) believe their costs will go up to some degree.
  • Income Tax Refunds - Among employees and retirees who have an idea if they will receive a federal or state tax refund for 2009 or not (those answering "not sure" were excluded), three-quarters (77%) of employees and 42% of retirees expect to receive a refund. Employees' plans for their refund include paying down or paying off short-term debts (44%) or saving or investing the refund (41%). Half of retirees plan to save or invest their refund, a significant jump from the same period last year (33%). Nearly another quarter of retirees (23%) plan to pay down/off short-term debts.

Employees Only

  • 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.
  • 401(k) Plans -
    • Eighty-five percent of employees who are eligible to participate in a defined contribution plan say they are currently participating, up significantly from 81% in the 4th quarter of 2009.
    • Over a third of employees (36%) indicated their 401(k) represents between 1% and 25% of their total retirement savings. Seventeen percent of employees said their 401(k) represents between 26% and 50% of their retirement savings, while 12% said their 401(k) makes up between 51% and 75% of their total retirement savings. Ten percent of employees indicated their 401(k) comprises between 76% and 99% of their retirement savings, and 14% said their 401(k) is all of their retirement savings.
    • Two-thirds of 401(k) participants indicated they would save for retirement on their own through an IRA, brokerage account or some other type of individual savings vehicle if they did not have a 401(k). Ten percent said they definitely would not while the remaining 23% were not sure.
    • Plan participants were asked how else they save for their retirement, besides their 401(k) plan. Nearly half (48%) have a savings account and just about a quarter (24%) have a Roth IRA. Approximately one of five employees has one of the following: IRA (22%), CD (20%), or a brokerage account (19%).
  • Corporate Bonuses - One out five employees received a corporate bonus for 2009, a significant decrease from this same period in 2008 (28%). The bonus was most often saved or invested, selected by over a third (38%) of employees - a significant increase from this same period in 2008 (29%).
  • Disability Income Insurance -
    • Three-fourths of employees rated the emotional impact of becoming disabled and not being able to work for a living as at least an 8 on a 10 point scale in which a 10 means "devastated."
    • If employees were to become disabled and could not maintain employment in their current job, the most commonly selected means of maintaining their current standard of living was to depend upon disability insurance benefits through their employer's disability insurance coverage (44%) or rely financially on their spouse/significant other or family (44%).
    • Just over a third (35%) of employees own disability insurance and plan to renew this insurance in the next year. Another 5% of employees own disability insurance but don't intend to renew their policy in the next year.
    • The most common reason employees do not own disability income insurance, selected by nearly half of the employees (45%), was cost in that it's too expensive to purchase this type of insurance. Another common reason was that the employees are covered by other insurance such as social security or employer provided group disability coverage (29%).
  • Voluntary Benefits at the Workplace -
    • The top voluntary benefits offered are dental (55%), vision (38%) and short-term disability (34%). These same voluntary benefits are the most commonly purchased voluntary benefits.
    • Nearly half (45%) of employees said it was either very important or absolutely essential for them to buy voluntary benefits at work.
    • The most preferred methods for learning about voluntary benefits were in a group meeting (29%), printed materials (23%) and in an individual one-on-one meeting (19%).
    • For voluntary benefit enrollment, employees are most likely to prefer a paper form with the help from an enroller (36%) or online by themselves (34%).
    • Over half of employees who have purchased voluntary benefits thought the voluntary benefit education provided by their employer was either very good (46%) or excellent (10%).
    • Over three-quarters (78%) of employees rated their confidence in making voluntary benefit decisions with the amount of education provided by their employer as confident, very confident or extremely confident.
    • Three out of five employees with voluntary benefits are either satisfied (47%) or very satisfied (13%) overall with their employer's voluntary benefits package.

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