The index reveals that the vast majority of American workers (71%, up from 67% a year ago) are concerned about their long-term financial security. The biggest financial worry respondents say keeps them awake at night is the ability to pay for basic necessities during retirement (up to 48% from 38% a year ago), according to a Principal news release. Workers are concerned that they will not be able to afford good medical care or sustain the same quality of life they currently enjoy (up to 44% from 39%), and retirees say their sleepless nights are due to the rising cost of inflation eating into their purchasing power (up to 44% from 28%).
Retirees are also concerned about their ability to maintain the same quality of life they enjoyed before retirement (up to 30% from 20%), affordability of good medical coverage (30% from 29%), and ability to pay for basic necessities (29%, up from 21%). Only 58% of workers and 80% of retirees feel confident they will have enough money to take care of basic expenses during retirement.
In addition, the news release said 53% of workers and 73% of retirees think they will have a retirement that is at least as affluent as their parents’, and 42% of workers and 61% of retirees are confident they will not have to worry about financial matters during retirement.
Despite these retirement worries, nearly a third of workers (31%) still have not planned for retirement. Nearly a quarter of retirees (22%) report they did not even begin to think seriously about retirement finances until they had retired, but looking back, 71% of retirees wish they had begun planning more than a decade before retiring.
As for managing retirement savings, 65% of workers say having a guaranteed monthly income is more important than having a contingency plan in case of a medical illness (60%), and 59% of workers say growth in account value is important. For retirees, a guaranteed monthly income is most important (59%), and cost of living adjustments (56%) rank second.
Americans Cut Spending
The latest Principal Financial Well-Being Index shows significantly more workers (61%, up from 56%) and retirees (61%, up from 55%) cut overall spending this quarter compared with second quarter 2008.
According to the Principal news release, in response to rising grocery and consumer prices, workers are:
eating out less (81%, up from 79% last quarter)
- spending less on clothing and other consumer items (75%, up from 74%)
- cutting back on entertainment (75%, down from 76%)
- driving less to save gas money (59%, up from 52%).
In addition, Principal found significantly more workers this quarter made cuts to compensate for rising fuel costs:
- 61% (up from 56% last quarter) are driving less
- 43% (up from 36%) are spending less on basic necessities
- 12% (up from 7%) have fallen behind on monthly bills
- 74% of retirees (up from 56%) are driving less.
Workers’ top concern for the election season is the economy/jobs, up to 79% from 52% a year ago. Only about one-third (35%) of workers are confident that one or more of the presidential candidates is capable of effectively dealing with the issue.
The Principal Financial Well-Being Index survey was conducted online by Harris Interactive on behalf of the Principal Financial Group, among 1,331 U.S. employees and 726 retirees. More information is available at www.principal.com.