Saving for Retirement Not a Top Priority for Most

While nearly half (48%) of workers are aware of the amount of money they need to set aside to comfortably retire, less than a third (30%) believe they are saving enough money to do so.

The Principal Financial Well-Being Index found the number of workers who have not yet planned for retirement remains relatively unchanged, at 24%, only a 2 percentage point decrease from the previous quarter.  

The survey’s results also indicate a significant disparity between workers who use a financial adviser and those who do not: 48% of workers who use a financial adviser believe they are saving enough money to retire comfortably, compared to 25% who do not use a financial adviser. Similarly, workers who do not use a financial adviser are significantly more likely to indicate they have not yet planned for retirement (28%) than workers who do use a financial adviser (11%).  

Despite the low number of respondents focusing on retirement saving and planning, the number of workers expressing concern about their long-term financial future dropped 11 percentage points from 72% in the fourth quarter of 2010 to 61% this quarter. Retirees also regained their financial footing, with 43% agreeing they are extremely happy about their current financial well-being, up from 36% in the previous quarter.   

The Principal survey also found more than a quarter (28%) of employees and 20% of retirees are optimistic regarding their economic outlook for 2011. Nearly half (45%) of workers and 57% of retirees are cautious. Only 15% of workers and 17% of retirees indicate they are pessimistic.   

The Index found many Americans plan to put their income tax refunds to long-term use. Of those surveyed who expected to receive a federal or state tax refund, 44% of workers and 50% of retirees said they plan to save or invest their refund this year. Others say they will use the refund to pay down short-term debt (42% of workers and 23% of retires).  

When asked about their plans for the additional take-home pay they will receive as a result of the reduced Social Security payroll tax in 2011, 30% of workers said they will use the extra income to cover daily expenses and 24% will use it to increase their savings. Twenty percent of workers will pay down or pay off short-term debt, while 14% will pay down or pay off longer-term debt. Fifteen percent of workers will increase their retirement savings, either through their employer-sponsored retirement account (8%) or another retirement account (7%).