Older Workers Make Retirement Plan Shifts

December 10, 2002 (PLANSPONSOR.com) - More than a third of workers have made a change to their retirement asset allocation in the past quarter - and nearly half of those older than 55 have done so, according to the Fourth Quarter 2002 Principal Financial Well-Being Index.

The 34% that changed allocations were the highest ever recorded by the Index, administered by Harris Interactive and sponsored by Principal Financial Group, and up dramatically from just 20% a quarter ago.   While 46% of those respondents over age 55 said they had made changes in the volatility of their retirement portfolio, less than a third of those aged 54 and younger did so.

Long-Term Tact

Those who didn’t make a change were mostly (58%) committed to a long-term approach to those investments.   However, nearly one-in-five said there were too many choices, and 8% said they “didn’t have enough time to make investment changes.”   Thirteen percent said they were following the advice of a financial planner or advisor, while 2% said they “were not very interested” in how their retirement savings were invested.

The Fourth Quarter 2002 Index found that nearly half (54%) ranked “job security” as more important than “long-term financial future” (31%) and “challenging work” (15%).   That was the highest importance ranking accorded job security in the history of the index.   A year ago 46% ranked job security as most important, while 40% were most focused on long-term future, and 14% embraced challenging work.

Health insurance and defined contribution plans were rated as “very important” by 91% and 74% of the respondents, respectively.  A quarter earlier 47% ranked job security as their number one concern (see Healthcare Concerns Weigh on Well-Being Index ).   Life insurance plans were rated “very important” by 56%, down from 54% a quarter ago.   Meanwhile, 61% rated defined benefit plans as “very important,” up slightly from a quarter earlier, with a like number citing disability insurance.   Stock options garnered just 18%.

Benefit Boost

Plan sponsors should feel good that 62% of survey respondents said that “Having a good benefits plan encourages me to work harder and perform better.”   Additionally, 27% of respondents said their employer “is concerned about their financial future,” compared with 24% in the prior quarter, and 21% two years ago.

Nearly half (44%) said that saving more was a New Year’s resolution for 2003, while 16% said they would plan for retirement.   However, those goals trailed exercising more (53%), losing weight (46%), and eating healthier (45%).   On the other hand, just 5% were “resolving” to work more.