Americans' Concern About Financial Future Rises Dramatically
The number of Americans who are concerned about their long-term financial future rose dramatically–to 67 percent in the third quarter for retirees (from 43 percent last quarter) and to 68 percent for workers (from 63 percent)–according to new research from the Principal Financial Well-Being IndexSM.
The Principal Financial Well-Being Index, which surveys both American workers at growing businesses with 10 to 1,000 workers and retired Americans, is released quarterly by the Principal Financial Group® and is conducted online by Harris Interactive®.
Americans are not only worried about the long-term. Short-term concerns also grew in the third quarter with 28 percent of workers and 36 percent of retirees reporting they are pessimistic regarding the economic outlook for the rest of 2011, up from 20 percent for workers and 21 percent for retirees last quarter. Looking beyond 2011, 58 percent of retirees and 46 percent of workers say the economy will worsen in 2012.
“Continued economic challenges have given many pause, signaling we may be a long way from home on the road to recovery,” said Luke Vandermillen, vice president of retirement and investor services at The Principal®. “While many Americans are feeling doom and gloom over the present economy, this is a wake-up call. Those who take steps to save for and protect their financial future may be better prepared to achieve their long-term financial dreams.”
Professional help propels confidence in adequate retirement savings
While long-term financial future may be top of mind, only a quarter (26 percent) of workers say they are saving enough money to live comfortably in retirement. This number increases significantly for those workers who seek the help of a financial professional: 42 percent of workers who use an advisor say they are saving enough money in order to live comfortably in retirement, compared to 22 percent who do not use an advisor.
Workers also report mixed views on how much they need to put away in order to have enough money coming in during retirement:
- 22 percent think they need to save 1-8 percent of their pay (including any employer match)
- 56 percent think they need to save 9 percent or more of their pay (including any employer match)
But in practice, more workers (42 percent) report saving 1-8 percent of their income, including any employer match, than those who say they are saving 9 percent or more (30 percent).
“The disconnect in what people think they should be saving versus what they are actually saving indicates more Americans need to get on track, develop a plan and seek help to start preparing for their retirement,” Vandermillen said. “In order to help ensure sufficient retirement income, we believe most retirement plan participants should be saving 11-15 percent of their pay–including any employer match–throughout an entire working career.”
Fad or fab, online deals and coupons influence how Americans spend
- Thirty percent of workers report making purchases from daily discount websites such as Groupon or Living Social in the past year.
- The top reasons workers are likely to purchase from these websites include getting a good deal (75 percent), purchasing items they would buy anyway at a discounted price (58 percent) or trying out new items/services at a discount (43 percent).
- Coupon clipping is reported by four out of five workers (80 percent). Top coupon-clipping items include food, personal care products, cleaning products and restaurants.
Education expenses pile up for many who struggle to save in the slow economy
- Among workers and retirees who have children that are not already out of school, 39 percent of workers and 26 percent of retirees are saving for their children’s college education.
- Seventy-four percent of workers and 59 percent of retirees report that the economy has made it more difficult to save for their children’s future college education.
- Nearly three quarters of retirees (72 percent) who are saving for their children’s college education are satisfied with their level of savings while only 30 percent of workers who are saving are satisfied.
- For workers, the top reasons for not saving for their children’s college education are finances (53 percent), followed by the expectation their children will pay via student loans (26 percent) or through scholarships (25 percent).
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 28 and August 8, 2011 among 1,150 employees and 549 retirees. Propensity score weighting was also used to adjust for respondents’ propensity to be online.
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.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®) is a retirement and global asset management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, investment services and insurance through its diverse family of financial services companies. A member of the FORTUNE 500®, the Principal Financial Group has $335.8 billion in assets under management and serves some 16.5 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
About Harris Interactive
Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries, including health care, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant and consumer package goods. Serving clients in more than 215 countries and territories through its North American, European and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help clients stay ahead of what’s next. For more information, visit www.harrisinteractive.com.
- Survey of 1,150 employees and 549 retirees conducted July 28 – August 8, 2011.
- “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
- As of June 30, 2011.