Workers Anticipate Better Finances in 2013

While nearly two-thirds of American workers view the economy as unhealthy, the percentage of employees who believe it will improve in 2013 has increased.

According to the fourth quarter “Principal Financial Well-Being Index: American Workers,” 43% of workers anticipate economic improvements next year, up from just 32% last quarter. Despite their confidence in the state of the economy in 2013, more employees (42%, up from 32% last quarter) are stressed about the economy, but fewer workers (36%) are stressed about their personal finances than last quarter (42%).  

Workers surveyed reported their worst financial blunders of 2012 were not saving enough (21%), accumulating credit card debt (13%) and not budgeting properly (10%). Their top financial resolutions for the new year are saving a set amount per month (29%), paying off credit card debt (27%) and cutting monthly spending (21%).  

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Compared with last quarter, more employees (71%, up from 65%) are very concerned about their long-term financial future. Three-quarters of Baby Boomers (75%) are very concerned about their long-term financial future and are the generation most likely to be concerned (64% of Gen Y; 72% of Gen X).

Two in five employees (43%) believe they are making good progress toward achieving their long-term financial goals. One-third of employees (32%) indicate they have not yet planned for their retirement savings/security. Nearly four in 10 employees who do not use a financial professional (36%) have not yet planned for retirement savings/security compared with 19% of employees who do use a financial professional.   

Forty-two percent of Gen Y employees have not yet planned for retirement savings/security, compared with 33% of Gen X employees and 24% of Baby Boomer employees. Only one-third of employees (35%) believe they will be financially prepared for a comfortable retirement. Nearly half of employees who use a financial professional (46%) feel they will be prepared for a comfortable retirement compared to 31% of employees who do not use a financial professional.  

For more than half of employees (53%), the biggest perceived threat to their retirement is insufficient retirement savings. Almost half of employees (48%) feel reductions in Social Security threaten their retirement, while one-third (34%) think reduced Medicare benefits is a threat. Fewer employees this year feel their retirement is threatened by market volatility (30%) and the use of retirement savings before retirement (16%).  

The full report can be downloaded from http://www.principal.com/wellbeing/.

Fee Disclosures for Complex Investments

An industry group has released a guide to help retirement plan sponsors and service providers navigate new participant fee disclosure rules.

The guide, published by the Defined Contribution Institutional Investment Association (DCIIA) will provide a framework to help identify and suggest practical approaches for addressing the challenges of new reporting and disclosure requirements, particularly as they apply to non-registered investment funds and custom investment solutions. It addresses collective investment trusts, custom fund-of-funds solutions and unitized separate accounts.  

“We recognize that we’re in uncharted territory and there is no one way to comply, however, we believe our membership of industry leaders can provide a reference guide of important considerations, key resources and best practices to meet the requirements,” the document says.  

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The guide can be downloaded from http://www.dciia.org under “Publications.”

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