U.S. Financial Jitters Results in Retirement Savings Reduction

Just over one in 10 American workers (11%) said they plan to cut back their retirement plan contribution rate as part of a general belt-tightening during the holiday season.

The retirement deferral reductions were one apparent reaction to Americans’ sense that the economy is either in a recession or could be in one soon, according to the latest Principal Financial Well-Being Index. A Principal news release said 71% of workers and 72% of retirees held that view about a U.S. recession. More than one-third of workers (37%) expressed concern about their own job security.

Other anticipated financial cutbacks, according to the survey announcement, included:

  • 29% of workers and retirees indicated they plan to spend less money than last year on holiday presents;
  • more than three-fourths of workers (76%) and 49% of retirees said they would eat out less often;
  • both workers and retirees said they would cut back on buying clothing and consumer goods (69% of workers and 49% of retirees);
  • almost two-thirds of workers (63%) and more than one-third of retirees (39%) said they would reduce entertainment, such as going to movies and concerts.

“Uncertainty about the direction of the economy clearly is top of mind as Americans navigate the holiday shopping season, which has turned into a gift giving extravaganza,” said Dan Houston, executive vice president of Retirement and Investor Services, The Principal, in the news release.

The Index, which surveys American workers at growing businesses with 10 to 1,000 employees, is released each quarter by the Principal Financial Group and conducted by Harris Interactive.