According to a Principal news release, one third (33%) of workers surveyed indicated they would allocate 25% to 49% of their retirement savings to an investment that provides a guaranteed amount of retirement income every month, compared to only 13% of retirees. Another third (32%) of employees said they would allocate 50% to 74% of their retirement savings to a guaranteed investment vehicle, compared to only 15% of retirees. Forty-two percent of retirees polled rejected the use of guaranteed income investment vehicles.
The index also found that most workers have a distorted view of retirement. Almost two thirds of the workers surveyed (62%) said they thought they would be in retirement for 20 years or less, though labor statistics contend that more than half of retirees will spend at least 20 years in retirement, the release said. Also, a large majority of workers (66%) and retirees (59%) said they thought they could take at least 6% from their retirement funds each year and be stable financially, but experts suggest that 4% is a more reasonable rate.
The current index also that 59% of employees now believe employers should automatically enroll their employees in 401(k) plans and deferral rate step up programs. Acceptance of automated plan features has grown since 2002 when only 35% of employees agreed with automatic enrollment.
Americans also want financial planning assistance in the workplace, with over three-fourths (82%) of workers surveyed expressing interest in this service. About half of workers (49%) indicated a willingness to pay for financial planning services through their employer, if offered at a reasonable price for this benefit.
Satisfaction among workers for their benefit programs is at a five-year high in key areas including retirement plans, disability insurance, life insurance and health insurance. Almost two-thirds (66%) of employees surveyed said they are satisfied with their defined benefit plans, compared to 51% in 2002. The differences in satisfaction levels between 2006 and 2002 were also significant for profit sharing plans (57% vs. 38%), defined contribution plans (55% vs. 44%), disability insurance (53% vs. 39%), life insurance (51% vs. 43%) and health insurance (46% vs. 39%).
The Principal Financial Well-Being Index survey was conducted online by Harris Interactive on behalf of The Principal Financial Group among 1,100 employees and 638 retirees (ages 18+) of small and mid-sized US businesses (firm size 10 – 1,000 employees) within the United States between May 1and May 5, 2006. More information can be found at http://www.principal.com/wellbeing .