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The Principal Financial Well-Being IndexSM - Summary 3rd 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 July 28 to August 8, 2010 among 1,172 employees and 519 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: 140 KB) - includes all questions and data

Featured Key Findings

  • Financial Well Being:
    • Three-fourths of employees and just over three out of five retirees (61%) are very concerned about their long-term financial future, both up significantly from 2nd quarter of 2010.
    • Over a third of retirees (36%) are extremely happy about their current financial well being compared to only 19% of employees – a significant decline from 2nd quarter of 2010 when a third of employees were extremely happy with their current financial well being.
    • Up significantly from 2nd quarter of 2010 (23%), over a quarter of employees (27%) have not yet planned for retirement savings and security.
    • A third of employees (up significantly from 29% in 2nd quarter 2010) and almost a quarter of retirees (22%) said their stress level related to their personal financial situation is much higher than at the same time last year.
  • Retirement Issues:
    • In thinking about their financial well being in retirement, the issue of most concern to employees is being able to afford/pay for the basic necessities (27%).
    • The issue most concerning to retirees is outliving their savings, selected by one-fifth of the retirees. Being able to afford good medical care is also of concern for many retirees as it was chosen by nearly one-fifth of the retirees (19%).
  • Rebuilding Financial Well Being:
    • Employees and retirees have taken many steps to improve or rebuild their financial well being since the recession began:
      • 68% of employees and 61% of retirees have spent less money
      • 52% of employees and 27% of retirees have paid down debt
      • 27% of employees and 18% of retirees have increased savings for an emergency fund
      • Nearly one out of five employees (19%) also indicated they have increased their retirement savings
    • Top priorities for employees as they attempt to rebuild their financial well being include living within their means (70%), having an emergency fund (49%), putting a budget together and sticking to it (39%), and protecting their nest egg (24%).
  • Sentiments on Economy, Housing Market and Consumer Spending:
    • Employees’ and retirees’ thoughts on what will happen with the economy in the next year were divided:
      • A third of employees and retirees think the economy will improve to some degree in the next year, both significant declines from 2nd quarter 2010.
      • Over a quarter of employees (28%) and slightly fewer retirees (23%) think the economy will stay the same.
      • Up significantly from 2nd quarter 2010, about two out of five employees (39%) and retirees (44%) think the economy will worsen to some extent over the next year.
    • Three fourths of employees and retirees think the unemployment rate is an important indicator in determining if we are on the road to financial recovery. Consumer spending was also commonly selected (52% of employees; 60% of retirees) as well as the employment status of friends, family and neighbors (46% of employees; 44% of retirees) and home sales/new home construction (43% of employees; 56% of retirees).
    • Nearly two thirds of employees (62%) and retirees (69%) agree to some extent 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:
    • Almost two-thirds of employees and retirees (64% of both groups) 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 (84% of both groups) intends to continue to spend less in the future regardless of economic conditions.
    • Over a quarter of employees (28%) anticipate spending less on at least one school related expense (clothes, activity/sport gear or school supplies) this year compared to last year.
  • Financial Reform - About two out of five employees (41%) and retirees (39%) think the financial reform will be either very ineffective or somewhat ineffective at preventing another financial crisis in the future.
  • Perceived Impact of Gulf Oil Spill on Gas Prices - Nearly two-thirds of employees (65%) and retirees (67%) believe the Gulf of Mexico oil spill will cause gas prices to either rise slightly or significantly in the near future.
  • Benefits Offered – The top benefits offered at businesses with 10-1,000 employees are health insurance (92%), dental insurance (75%), defined contribution plans (64%), life insurance (63%) and free parking (59%).
  • Benefit Importance – Employees have consistently rated health insurance and defined contribution plans as the most important employee benefits for the past few years.
  • Benefit Satisfaction – Employees are most satisfied with their profit sharing/bonus plan, defined benefit plan, and disability insurance offered by their employer.
  • Benefit Improvement – Employees are most likely to say they would like to have their health insurance 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.
  • 401(k) Automatic Enrollment – Just over a quarter of employees (27%, up from 21% in 1st quarter 2008) have automatic enrollment with their employer’s 401(k) retirement plan. Two out of five employees (44%) agreed to some extent that all eligible employees should be auto-enrolled.
  • Plan for Retirement – A quarter of employees have created a plan for how they will transition their retirement savings into a steady stream of income in retirement. Of those employees who have a created a plan, a third have a written plan.

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