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The Principal Financial Well-Being IndexSM - Summary 2nd 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 April 28 to May 9, 2010 among 1,133 employees and 501 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: 168 KB) - includes all questions and data

Featured Key Findings

  • Impediments to Financial Success:
    • Half of employees (51%) said not saving enough gets in the way of their financial success, while around a third of employees said credit card / other consumer debt (35%) or not starting retirement savings early in their career (33%) are factors impeding their financial success.
    • Another one in five employees indicated impulse purchases (22%) or living beyond one’s means (20%) gets in the way of their financial success.
    • Retirees were also most likely to indicate not saving enough is a factor that gets in the way of their personal financial success (38%). Nearly a third (31%) of retirees said not starting retirement savings early in their career has impeded their financial success.
  • 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 (69% of employees; 60% of retirees), paid down debt (51% of employees; 36% of retirees), and increased savings for an emergency fund (29% of employees; 14% of retirees).
    • One out of five employees said they have increased their retirement savings.
    • Top priorities for employees as they attempt to rebuild their financial well being include living within their means (62%), having an emergency fund (44%), putting a budget together and sticking to it (38%), and protecting their nest egg (25%). Similarly, retirees’ top priorities include living within their means (62%), protecting their nest egg (37%), putting a budget together and sticking to it (32%) and having an emergency fund (28%).
    • Nearly four out of ten employees (38%) and retirees (39%) agreed that now more than ever, American consumers are ready to take action to build their financial well being.
  • Sentiments on Economy, Housing Market and Consumer Spending:
    • Nearly a third of employees and retirees (31%) described their sentiment about the economy and their ability to rebuild their finances as cautious. Over a quarter of employees (29%) and 20% of retirees are optimistic, while nearly one out of five employees (19%) and a quarter of retirees is pessimistic.
    • About half of employees (49%) and retirees (55%) think the economy will improve to some degree in the next year. Over a quarter of employees (27%) and significantly fewer retirees (16%) think the economy will stay the same in the next year, while a quarter or so of employees (24%) and 30% of retirees think the economy will worsen.
    • Around a third of employees (37%) and retirees (32%) believe the housing market has bottomed.
    • Two thirds of employees (65%) and retirees (68%) agree that American consumers will go back to their old ways of spending too much / saving too little once the economy rebounds.
  • Economy’s Impact on Spending and Other Financial Behavior:
    • Three out of five employees (61%) and slightly fewer retirees (55%) indicated they have reduced their spending to some degree in the past two months due to the economy.
    • Of employees and retirees who have reduced their spending, the majority (79% of employees; 84% of retirees) intend to continue to spend less in the future regardless of economic conditions.
    • Due to the economy, over half of employees (52%) and retirees (55%) are preparing more meals at home instead of eating out. Lowering the thermostat at home was also commonly selected by over a third of employees (41%) and nearly half of retirees (47%). Nearly a third of employees (32%) indicated they have started bringing their lunch to work, while just about a quarter of both employees (23%) and retirees (24%) have bought in bulk.
    • The overwhelming majority of both employees (98%) and retirees (99%) said they would continue to make at least some of these changes in the future regardless of the economy.
    • As a financial check-up, over half of both employees (58%) and retirees (56%) have monitored their spending levels in the past year due to the economy and over a quarter of employees (28%) and a third of retirees (35%) have re-evaluated their investments.
  • Healthcare Reform:
    • Over half of employees (58%) and retirees (54%) think healthcare reform will have a direct impact on their personal health insurance costs.
    • Of those believing their costs will be affected, 67% of employees and 69% of retirees think their costs will go up significantly. The vast majority of both employees (88%) and retirees (85%) believe their costs will go up to some degree.
  • Summer Vacation Plans:
    • Around a third of retirees (35%) and two out of five employees have not changed their summer vacation plans due to the current state of the economy. A third of employees (34%) and a fifth of retirees have altered their vacation plans to save money. Just over two out of five retirees (42%) and a quarter of employees were not planning to take a summer vacation.
    • Rising fuel prices was the top fear that could potentially impact their summer vacation plans, selected by 42% of employees and half of retirees, both up significantly from 2nd quarter of 2009. Having enough money saved for vacation was also a concern (35% of employees; 31% of retirees), as well as a job loss for employees (30%).
  • Benefits Offered – The top benefits offered at businesses with 10-1,000 employees are health insurance (92%), dental insurance (76%), defined contribution plans (66%), life insurance (65%) and free parking (60%).
  • Benefit Importance – Employees have consistently rated health insurance and defined contribution plans as the most important employee benefits for the past five years.
  • Benefit Satisfaction – Employees are most satisfied with their defined benefit plan, defined contribution plan and life insurance.
  • Benefit Improvement – Employees would most like to have their health insurance benefits improved.
  • Understanding Benefits – Half of employees say they have taken a greater interest in understanding their employee benefits they receive through their employer given the economic environment in the last year.
  • Defined Contribution Plans – Deferral Level - Employees who are currently participating in their defined contribution plan (82% of those eligible) were asked how they selected the amount they are currently contributing to their plan. Half of employees said they selected their current contribution level because it’s what they can afford to contribute. Another quarter (27%) said they contribute enough to receive their employer’s match. Less than 10% of employees indicated their contribution amount was recommended by someone else – their advisor, employer or another individual.

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