Amy Friedrich, president of Benefits and Protection at Principal, introducing the Well-Being Index.
2026 Wave 1
The Principal Financial Well-Being Index is our comprehensive quarterly study of the financial health of U.S. employers. The index score factors in business health, growth, and optimism based on economic outlook. Our research draws insights from business owners, key decision makers, and executive leaders across organizations ranging from small businesses to large enterprises (2–10,000 employees) that offer employee benefits and retirement plans.
Businesses’ perceptions of their own growth held steady compared to the last Well-Being Index wave in October 2025, but they haven’t rebounded from the lows seen in April 2025. Optimism about the broader economic outlook, however, has increased, helping to realign businesses’ views of their own growth with their expectations for the overall economy.
“We’re seeing businesses continue to prioritize staffing as a key part of their overall operational strategy. They are focused on keeping their teams intact and counting on them to leverage new technology and modernized systems to continue driving growth.”
Amy Friedrich
President, Benefits and Protection, Principal®
Businesses hiring, maintaining, and decreasing staff remained largely static compared to October 2025. Patterns emerge, however, when separated by industry. For example, hiring in education and health services rebounded, helping offset losses in other industries.
Education and health services businesses are particularly concerned with employee retention; a shortage of qualified employees, followed by attracting new employees, is the primary concern for both professional and manufacturing businesses.
“In terms of hiring, we find it difficult to get the type of talent we were seeing in the past.”
Education business with 4,000 employees in Ohio
Eighty-one percent of businesses are planning for a technology upgrade in 2026. Large businesses lead the way with 50% very likely to make upgrades, compared to 33% of small businesses.
54% of businesses plan to upgrade software.
45% of businesses plan to upgrade or implement AI.
21% of businesses plan to upgrade hardware.
Of businesses that said they plan to implement or upgrade AI, 62% lacked specificity on what they plan to do with the technology.
“Many organizations know they need to invest in AI, but the real differentiator is how they use it to empower their people and strengthen outcomes. The next phase of AI will be led by companies that pair technology with human potential, focusing on meaningful business results, higher productivity, and better customer experiences. That’s when AI moves from experimentation to real enterprise impact.”
Kathy Kay
Chief information officer, Principal®
Forty-two percent of businesses expect to take on debt this year, primarily to support modernization efforts, invest in physical or liquid assets, or expand their workforce or operations.
(Among businesses likely to take on debt; option to select up to three)
“We’re planning to upgrade and add new technology across our cloud infrastructure, observability/AI operations, security, and automation tooling to improve reliability, scale, and operational efficiency. We may fund part of this investment through financing/debt to accelerate the modernization roadmap.”
Information management business with 3,000 employees in Michigan
17% Within the next month
36% Within the next three months
27% Within the next six months
15% By the end of 2026
5% I’m not sure
“In today’s environment, the imperative to invest in growth and extract efficiency gains through technological innovation is reshaping capital allocation decisions. As a result, both small and large businesses are increasingly willing to take on debt to fund technology, software, and automation upgrades—even as borrowing costs remain well above 2020-era levels.”
Seema Shah
Chief global strategist, Principal Asset Management®
More than four in 10 businesses (42%) say that interest rates are very important or even the most important factor when it comes to their final decision on whether to proceed with a new line of credit. Large businesses are more likely than small businesses to consider rates a very important factor in their decision.
“Interest rates are only one part of a larger financial picture. Often, the value gained from putting capital to work sooner can quietly outpace the value of holding out for ideal conditions. Across industries, we’re seeing organizations embrace a realistic but resilient mindset: They understand today’s borrowing environment, and they’re choosing to invest anyway because growth can’t wait.”
Amy Friedrich
President, Benefits and Protection, Principal®
The Principal Financial Well-Being Index℠ (WBI) Wave 1 (January 15–February 1, 2026) is recurring research used to track sentiment around repeated financial health measures and timely issues relevant to businesses.
Business owner, decision maker, and leader participants who represent companies with 2–10,000 employees (n=1,000) provide information by completing a 15-minute online survey. Access to sample is provided by ROI Rocket, a third-party research panel provider.
In 2025, the WBI added a formal index. The index number in the WBI is calculated by taking responses from six perceptual measures evaluating current financial health, financial comparisons year over year, and projections for business and economic outlook. The percentages of respondents who answered positively for each measure are averaged and standardized to a 0–10 scale, with perceptions of business/company, local economic, and U.S. economic growth weighted 60%, 20%, and 20% respectively within their aggregate measure.
Small businesses = 2–499 employees, Large businesses = 500–10,000 employees
