Survey finds most are spending less, paying down debt and increasing savings

DES MOINES, Iowa--(BUSINESS WIRE)-- Americans are no longer dwelling on concerns about the economy and instead are focused on rebuilding their finances for the future, according to new research from the Principal Financial Well-Being Index^SM.

When asked what steps they have taken to improve or rebuild their financial well-being since the economic downturn began in 2008, most Americans (62 percent of workers and 54 percent of retirees) said they are spending less money, paying down debt (45 percent of workers; 29 percent of retirees) and increasing savings for an emergency fund (22 percent of workers; 14 percent of retirees). Eighteen percent of workers also indicated they have increased their retirement savings since 2008.

Recent behavior has been fueled by fears of long-term financial uncertainty and rising health care costs. Two-thirds of workers are very concerned about their long-term financial future, slightly less than in fourth quarter of 2009 (71 percent). Nearly the same percentage of retirees (64 percent) is very concerned about their long-term financial future; up significantly from fourth quarter 2009 (56 percent).

More than half of Americans (55 percent of workers and 54 percent of retirees) think health care reform will have a direct impact on their personal health insurance costs. Of those who think they will be impacted, the vast majority of both retirees (86 percent) and workers (82 percent) believe their costs will go up.

“Americans’ confidence was shaken by the economy, but they haven’t given up,” said Luke Vandermillen, vice president of retirement and investor services at the Principal Financial Group^®. “As some indicators show things may be turning around, Americans are taking responsibility and beginning to plan a new future by getting their finances back on track.”

The Principal Financial Well-Being Index, which surveys both American workers at growing businesses with 10 to 1,000 workers and retired Americans, is released quarterly by the Principal Financial Group and is conducted online by Harris Interactive^®.

With extra cash from tax refunds and bonuses, Americans will pay off debt or build up nest egg

According to the survey, 77 percent of workers and 42 percent of retirees expect to receive a tax refund this year. Workers’ plans for their tax refund include paying down or paying off short-term debts (44 percent) or saving or investing the refund (41 percent). Half of retirees plan to save or invest their refund, a significant jump from the same period last year (33 percent). Nearly another quarter of retirees (23 percent) plan to pay down or pay off short-term debts.

One out five workers received a corporate bonus for 2009, a significant decrease from this same period in 2008 (28 percent). The bonus was most often saved or invested – selected by more than a third (38 percent) of workers – a significant increase from this same period in 2008 (29 percent).

“It’s encouraging to see that instead of spending extra cash, this year Americans are rebuilding their portfolios by paying off debt, saving or investing,” Vandermillen said.

Other key findings include:

Americans don’t want to go it alone for financial planning

• Forty-eight percent of retirees and 34 percent of workers said a third-party professional (certified financial planner, bank or financial institution, accountant, benefit provider or financial services company, stock broker, insurance agent or attorney) would be the person they would go to first for financial advice.
• Three out of four workers said they would definitely or possibly use a financial planning service if their employer offered it.

Despite fears, Americans aren’t protecting themselves

• Three-fourths of workers rated the emotional impact of becoming disabled and not being able to work for a living as at least an eight on a 10 point scale in which a 10 means “devastated.”
• Nearly half (49 percent) of workers don’t own or plan to buy disability insurance in the next year and say instead they plan to rely on their family, disability insurance from their employer or savings in the event of a disability.

See the full report and past results at www.principal.com/wellbeing.

Methodology

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 27 and February 8, 2010, among 1,067 employees and 614 retirees. 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. No estimates of theoretical sampling error can be calculated; a full methodology is available.

This is one in a series of quarterly studies to identify and track changes in the workplace of small and midsize (growing) businesses. The first Principal Financial Well-Being Index^SM survey was conducted in the United States in 2000.

About the Principal Financial Group

The Principal Financial Group^® (The Principal^®)¹ is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $284.7 billion in assets under management² and serves some 18.9 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

About Harris Interactive

Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant and consumer package goods. Serving clients in more than 215 countries and territories through our North American, European and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us – and our clients – stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.

¹ “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

² As of December 31, 2009

Principal Financial Group
Sonja Sorrel, 515-362-2431
sorrel.sonja@principal.com
or
Fleishman-Hillard Inc.
Sheila Rose, 212-453-2492
sheila.rose@fleishman.com

Source: Principal Financial Group