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The Principal Financial Well-Being IndexSM Index Summary - Second 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 April 27 and May 6, 2009 among 1,189 employees and 509 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 Index 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, education, 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: 121 KB) - includes all questions and data

Featured Key Findings

Employee and Retiree Comparisons

  • Politics/Economy – Employees and retirees were asked how they think they will do financially twelve months from now as a result of the government’s economic stimulus plan.  The majority of both employees (60%) and retirees (56%) believe they will be the same financially in twelve months as a result of the government’s economic stimulus plan.
  • Economy's Impact on Spending
    • Just under half of employees (48%) and slightly fewer retirees (42%) said they have paid more often with cash than with credit cards in the past six months.
    • Due to current economic conditions, half of retirees and six out of ten employees are preparing more meals at home instead of eating out.  Lowering the thermostat at home was selected by over a third of retirees and employees.  Three out of ten employees indicated they have started bringing their lunch to work, while over a quarter of both retirees (27%) and employees (30%) have started to shop in their own closet instead of making new purchases. 
    • Two out of ten retirees and employees (21%) have postponed the purchase of a vehicle due to recent economic conditions.  Just about 10% of both retirees and employees (9%) indicated they have sold miscellaneous items such as jewelry or artwork due to recent economic conditions.
    • Twenty-one percent of employees with children have had to cut back on the number of activities their children are involved in due to financial constraints related to current economic conditions.
  • Emergency Fund
    • Two-thirds of retirees (67%) and over half of the employees (59%) have an emergency fund of money they can immediately access if necessary.
    • Two-thirds of retirees said they could cover over 6 months of living expenses with their emergency fund, compared to only 36% of employees.  Over a quarter of employees said they could cover three to four months of living expenses (27%) with their emergency fund, and another 20% said they could cover 5 – 6 months of expenses.
    • Only 11% of both employees and retirees said they have had to tap into their emergency fund recently to cover monthly expenses.
  • Summer Vacation Plans
    • Just about a third of retirees (36%) and employees (32%) have not changed their summer vacation plans due to the economy.  More than a third of employees (36%) and a quarter of retirees (24%) have altered their vacation plans to save money.
    • For employees, loss of a job was the top fear that could potentially impact their summer vacation plans, selected by 39% of the employees, up significantly from 2nd quarter of 2008 (23%).  Also of concern to employees was having enough money saved for vacation (37%) and rising fuel prices (33%).  Retirees’ top fears included having enough money saved for vacation (29%) and rising fuel prices (27%).

Employees Only

  • Benefit Importance – Consistently, for the past five years, the largest percentage of employees have rated health insurance and defined contribution plans an 8, 9 or 10 on a 10 point scale with 10 being “Very Important”.
  • Benefit Satisfaction – Employees are most satisfied with their defined benefit plan, disability insurance and profit sharing/bonus plan.
  • Retirement SavingsEmployees 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.  Around four out of ten (41%) employees think it will take between 2 to 5 years to recover their retirement account balance, while another 15% believe it will take 6 to 10 years.  Six percent of employees saving for retirement think it will take over 10 years to recover their account balance.  Only 3% of employees think they will never recover their account balance.
  • Retirement Date Though only 13% of employees said they are delaying their planned retirement due to current economic conditions, this is a significant increase from the percentage (10%) of employees who indicated they were planning to delay their retirement date in 1st quarter 2009.  Just over a third of employees (35%) said they have not changed their planned retirement date.
  • 401(k) Changes
    • Up significantly from 1st quarter 2009 when 10% of employees reported making some type of change to their 401(k) account, 15% indicated they have made some type of change to their 401(k) this quarter in the past six months due to the economy.
    • Employees have made these changes most commonly to pay daily expenses (42%) or to pay down debt (37%).  Over a quarter of employees (27%) are making changes to their 401(k) account in order to build up their savings account – a significant increase from 1st quarter 2009 (12%).
    • Having their employer reduce their salary/pay would cause 42% of employees contributing to their retirement to either reduce or stop their contributions.  Nearly a quarter (22%) of employees indicated they would reduce or stop their contributions if their employer stops matching or postpones matching their contribution.  Fear of losing their job would cause 17% of employees to reduce or stop their retirement plan contributions.
  • Job Security – Job security was ranked number one in terms of importance by more employees (54%), over long-term financial future (36%) and challenging work (10%).  Just over a quarter (27%) of employees have some level of concern with their own job security. 

Retiree Only

  • Stock Market's Impact on Standard of Living – Retirees were asked if the recent decline in the stock market has affected their ability to maintain the same standard of living they had a year ago.  Approximately a quarter (24%) of the retirees said the recent stock market decline has impacted their ability to maintain the standard of living they had just a year ago.

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