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The Principal Financial Well-Being IndexSM Summary 3rd Quarter 2011

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. 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: 758 KB) - includes all questions and data

Featured Key Findings

  • Financial Well Being
    • Two-thirds of employees (68%, up from 63% last quarter) and retirees (67%, up from 43% last quarter) are very concerned with their long-term financial future.
    • A quarter of employees (27%) and a third of retirees (35%, down from 41% last quarter) are extremely happy about their current financial well being.
      • Employees who use the services of a financial advisor for financial advice, guidance, and/or products for a fee or commission are significantly more likely to report they are extremely happy with their current financial well being (39%) than employees who do not use a financial advisor (25%).
      • Male employees are more likely to say they are extremely happy with their current financial well being than female employees (31% of males; 23% of females).
    • Over a quarter of employees (29%, up from 24% last quarter) have not yet planned for retirement savings/security.
  • Retirement Concerns
    • Employees' top concerns regarding their financial well being in retirement include being able to afford/pay for the basic necessities (41%), being able to afford good medical care (39%) and being able to enjoy the same quality of life they live now in retirement (35%).
      • Employees who work with a financial advisor are more likely to be kept awake at night by many financial concerns related to their well being in retirement than are employees who do not work with a financial advisor.
    • Retirees' top concerns regarding their well being in retirement include inflation (50%), being able to afford good medical care (39%) and being able to afford/pay for the basic necessities (36%).
  • Economic Outlook
    • When asked how they would describe their sentiment regarding the economic outlook for 2011, approximately half of both employees (51%) and retirees (46%) selected “cautious”.
    • A higher percentage of employees (28%) and retirees (36%) are “pessimistic” in their economic outlook for 2011 compared to last quarter (20% of employees; 21% of retirees).
  • Financial Dreams
    • Around a quarter of both employees (29%) and retirees (25%) said they are confident, very confident or extremely confident in their ability to achieve their dreams for their financial future.
      • Employees who use a financial advisor were significantly more likely to be confident, very confident or extremely confident in their ability to achieve their dreams for their financial future (38%) than employees who do not use an advisor (28%).
  • Financial Advisor Usage
    • Only 16% of employees (down from 25% in 2nd quarter of 2011) and just over a quarter of retirees (29%, also down from 35% last quarter) indicate they use a financial advisor who provides them financial advice, guidance, and/or products for a fee or commission.
    • Employees are most likely to want investment advice (36%), help in determining income needs in retirement (35%) and help in determining if they are saving enough for retirement (31%) from a financial advisor.
  • Educational Expenses and Planning
    • About a quarter of employees (24%) intend to spend less on at least one school related expense this year compared to last year.
    • Among employees and retirees who have children that are not already out of school, over a third of employees (39%) and a quarter of retirees (26%) are currently saving for their college education.
      • The economy has made it more difficult for the majority (74% of employees; 59%) to save for their children's college education.
      • Nearly three quarters of retirees who are saving for their children's college education (72%) are satisfied with their level of savings while only 30% of employees who are saving are satisfied.
    • For employees, the top reason for not saving for their children's college education is finances (53%), followed by the expectation their children will pay via student loans (26%) or through scholarships (25%).
  • Usage of Discount Websites and Coupons
    • Thirty percent of employees and 11% of retirees report making purchases from daily discount websites such as Groupon or Living Social in the past year.
    • The most common reasons for using such sites is to get a good deal (75% of employees; 64% of retirees), followed by to purchase items/service they usually purchase anyway but at a discount (58% of employees; 67% of retirees) and to try out new items/services at a discount (43% of employees; 49% of retirees).
  • Employee Benefits
    • Employees continue to rate health insurance as the most important benefit (87%), followed by dental insurance (67%) and defined contribution retirement plans (66%). Health insurance is the benefit most employees would like to see improved (42%), while defined benefit plans is the benefit most employees would like to see their employer offer (21%).
  • Retirement Savings and Readiness
    • In terms of retirement savings, two out of five employees (42%) are currently saving 1%-8% of their pay; however, only 22% of employees think they need to save 1%-8% of their pay to have enough income in retirement. Furthermore, 30% of employees are currently saving 9% or more for their retirement while over half (56%) think they need to be saving at least 9% in order to have enough income in retirement.
    • Just under half of employees (46%) are aware of the amount of money they will need in order to be comfortable in retirement.
      • Those who use a financial advisor (62%) are more likely than employees who do not use an advisor (43%) to be aware of the amount of money they need in order to be comfortable in retirement.
    • A quarter of employees (26%) feel they are saving enough money in order to live comfortably in retirement.
      • At least two out of five employees (42%) who use a financial advisor believe they are saving enough money in order to live comfortably in retirement, compared to one out of five employees (22%) who do not use a financial advisor.
  • Financial Plan for Retirement
    • The majority of employees (76%) do not have a plan for transitioning their retirement savings into a steady stream of income in retirement (52% of employees who use the services of a financial advisor have a plan versus 18% of those without a financial advisor).
    • About two out of five employees (44%) who have a plan have an actual written plan (56% of employees who use an advisor have a written plan versus 36% of employees who do not use an advisor).
    • Only 14% of employees who have a plan for transitioning their retirement savings are either very confident or extremely confident that their retirement portfolio will provide enough income in retirement.

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