According to a Principal press release, recent market volatility has caused about half of workers (49%) to review their financial strategies, and there is growing concern among Americans regarding their ability to save for retirement (66%, up from 60% a year ago).
This appears to have encouraged them to take action and better prepare, Principal said, as less than one-quarter (20%) of those included in the index indicated they have not yet planned for retirement, compared with 26% last year. In addition, 14% of workers indicated they have actually increased the amount they are saving toward retirement, compared with 11% last quarter.
Contrary to historical behavior, more than half of workers (58%) are actively engaged in regularly or constantly checking the status of their retirement accounts, the press release said. The index shows that among those with retirement savings, nearly three-fourths (73%) are either saving the same amount or have increased the amount they are saving toward retirement, and 23% (compared with 14% during fourth quarter 2008) have moved from volatile to more stable investments over the past six months.
Principal also found Americans are demonstrating more discipline when it comes to discretionary spending, as only 5% of retirees and 10% of workers said they were moved by special incentives and sales offered by retailers to purchase items they “do not need.” In addition, as financial concerns mount, significantly more workers (73%, up from 66%) and retirees (66%, up from 59%) reduced their overall spending during the past two months, compared with the fourth quarter 2008.
Principal found more than half of retirees (55%) were not aware that Congress suspended the required minimum distribution (RMD) requirement for 2009. Ten percent of those age 70 or older indicated they will take full distribution in 2009, and 6% said they will take a distribution, but less than their full amount in 2009. Only 13% said they will not take any distribution in 2009.
More results of the the Principal Financial Well-Being Index are available at www.principal.com/wellbeing.