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The Principal Financial Well-Being IndexSM Index Summary - First Quarter 2009

This Principal Financial Well-Being Index SM survey was conducted online within the United States by Harris Interactive on behalf of the Principal Financial Group® between January 26th and February 9, 2009 among 1,155 employees and 540 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, 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 - The majority of employees (73%) and retirees (63%) stated the economy/jobs should be President Obama's primary focus. Nearly half of employees (49%) and retirees (53%) agreed that they are confident in the Obama administration's ability to deal with the economic crisis and bring this country out of a recession. Respondents were split on the expected state of the economy at the end of 2009. About a third of employees (35%) and retirees (33%) expect the current economic crisis to be better than it is today by the end of 2009. A quarter or so of both retirees (27%) and employees (24%) expect the economy to be worse at the end of 2009 than it is today.
  • Financial Well Being - Significantly fewer retirees (63%) than employees (74%) are very or somewhat concerned about their long-term financial future. However, this percentage (63%) of retirees concerned about their long-term financial future is up significantly from 1st quarter 2008 (49%). Additionally, the percentage of retirees (33%) agreeing that they are extremely happy about their current financial well being is down significantly from 1st quarter 2008 (46%).
  • Investment Changes – Twenty-seven percent of employees with retirement savings are making changes to their investments (up significantly from 4th quarter 2008 when 18% reported making changes) – 23% to stable and 4% to volatile. Significantly more employees (23%) this quarter are moving to stable investments compared to 4th quarter of 2008 (14%). Similar to employees, 24% of retirees have moved to more stable investments.
  • Economy's Impact on Spending - When asked how the current economy has impacted their overall spending in the past two months, two thirds of retirees (66%) and nearly three fourths of employees (73%) have reduced their overall spending to some degree, both up significantly from 4th quarter 2008. The top trigger to get employees spending again (43%) was a major personal tax cut and the top trigger to get retirees spending again was a significant rise in the stock market (40%).
  • Income Tax Refunds – Seventy-eight percent of employees expect to receive a tax refund for 2008, while significantly fewer retirees (45%) expect a refund. When asked what they plan to do with the refund, employees (41%) and significantly fewer retirees (19%) plan to pay down or pay off short-term debts. Four in ten employees and a third of retirees plan to save or invest their refund.

Employees Only

  • Benefits- The availability of health insurance, defined contribution plans, life insurance, free parking tuition reimbursement, flex time, defined benefit plans, child care subsidies, and on-site day care have decreased significantly when compared to 1st quarter 2008. Employees continue to rate health insurance as the most important benefit, followed by defined contribution plans, dental insurance, disability insurance, and defined benefit plans. Health insurance is the benefit most employees would like to see their company improve upon.
  • Health Coverage Changes – Four out of ten employees (43%) have not seen health coverage changes in the past 12 months. Nearly three out of ten employees have seen increased employee co-pays (29%) and increased employee deductibles (29%).
  • Job Security – Job security continues to top the importance chart when compared to long-term financial future and challenging work. Six out of ten employees ranked job security as most important to them. When asked what concerns they have about their company in the next year, the most common concern cited was that their company will reduce the number of employees, mentioned by 46% of employees (up significantly from 4th quarter of 2008 when 41% expressed this as a concern).
  • Planning for Job Loss - Employees were asked what actions they have taken, if any, to prepare for a potential lay off from their employer. The most common action taken by employees to prepare for a potential lay off was to cut spending on miscellaneous items such as eating out, take out coffee, entertainment, and other consumer purchases, reported by 43% of employees. Nearly a quarter (23%) of employees have tried to put aside more money in savings each month, while 19% have cut some of their fixed monthly expenses such as gym memberships, media subscriptions and cable TV.
  • Retirement Savings – Nearly six out of ten (59%) employees said they have not changed the amount they are saving towards retirement in the past six months. Fourteen percent of employees have increased the amount they are saving, up significantly from 11% in 4th quarter 2008. Although only 7% of employees reported that they have reduced the amount they are saving for retirement, this is a significant increase from 4th quarter 2008 (4%). Twenty percent of employees indicated they are not currently saving for their retirement.
  • 401(k) Changes - Employees participating in their employer's defined contribution plan were asked what changes they have made, if any, to their 401(k) account in the past 6 months due to current economic conditions. Consistent with 4th quarter 2008, 10% indicated they have made some type of change to their 401(k) – 5% have decreased the amount they are contributing to their 401(k), 4% have stopped contributing to their 401(k) account, 2% have taken out a loan from their 401(k) account, and 1% has taken out a hardship withdrawal. Employees who have made changes to their 401(k) account have made these changes most commonly to pay daily expenses (45%) or to pay down debt (26%).
  • Disability Income Insurance – Employees were asked a number of questions related to their knowledge of individually purchased disability income insurance.
    • Respondents were provided a list of potential things (see a doctor for stress, anxiety or depression, are involved in a motor vehicle accident, suffer a bad back, become seriously ill or die) that could happen and asked which is most likely to happen over the course of a year. Approximately seven out of ten employees (69%) said none of these things are most likely to happen.
    • Forty-five percent of employees feel not at all knowledgeable about individually owned disability insurance.
    • Fourteen percent of employees personally own a disability income insurance policy on themselves, a significant decrease from 1st quarter 2008 when 18% reported owning such a policy. Only 7% of employees' spouses own a disability income insurance policy.

Retiree Only

  • Required Minimum Distribution - When retirees were asked of their awareness of the temporary suspension of Required Minimum Distribution in 2009, nearly six out of ten (55%) indicated they were not aware of this change. Sixteen percent said they would still take their distributions, with 10% indicating they would take their full distributions while 6% thought they would only take some of their distributions. Another 13% said they definitely would not take any distributions in 2009 and 11% were not sure. The majority of retirees interviewed (59%) indicated this does not yet apply to them as they are not yet 70 ½ years old.

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