Guaranteed Income Top Priority for Managing Retirement Savings

September 8, 2008 ( - The latest Principal Financial Well-Being Index reveals that the vast majority of American workers (71%, up from 67% a year ago) are concerned about their long-term financial security, and significantly more Americans this year compared to last year are losing sleep over it.

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%), while 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.

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%), and
  • 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, and
  • 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 within the United States by Harris Interactive on behalf of the Principal Financial Group between July 31-August 11, 2008, among 1,331 employees and 726 retirees.

More information is at .