Survey: Americans Hit with Financially Induced Insomnia

September 7, 2005 ( - Many Americans are so concerned about their retirement financial future that it keeps them awake at night.

That was a central finding of the latest Principal Financial Well-Being Index, which surveys Americans about their feelings about a variety of financial matters, a Principal news release said.

Among respondents who said they spent sleepless nights worrying about financial well-being in retirement, 32% said their number one worry is being able to afford even the basic necessities in retirement.

Top concerns about financial well-being in retirement keeping others up at night include:

  • the ability to maintain their current quality of life (25%)
  • ability to afford good medical care (22%)
  • outliving their savings (11%).

Women especially suffer financial insomnia, with a higher percentage of women than men expressing concern about affording basic necessities during retirement (38% women verses 26% men); yet higher percentages of men than women are most concerned about maintaining their same quality of life in retirement (30% men verses 19% women).

“For this generation of American workers, the American Dream has the potential to become a nightmare,” said Dan Houston, senior vice president, Retirement and Investor Services, The Principal, in the news release. “But our message to Americans is much more optimistic…with just a little preparation and planning, Americans can still make their financial dreams a reality.”

Knowing How to Save

Almost half of American workers (49%) said they didn’t know enough to effectively plan and save for retirement.

In fact, American workers had a much easier time identifying how much money they’d need to make other major purchases or plan for life events other than retirement including what they would need to buy a computer (94%) and a car (90%). Meanwhile 77% said they knew how much they’d need for a down payment on a house, or to buy a plasma TV (77% each), go on a weeklong cruise vacation (73%), provide a college education (63%) or pay for a new kitchen for their home (57%).

But retirement was last on the list. Only 36% of respondents said they knew how much money they would need when they stop working.

When it comes to plan participation, almost half (49%) of workers now embrace the increasingly popular auto enrollment, compared to a year ago, when only 37% of workers supported the idea. Yet currently, only 18% of workers surveyed said they had access to 401(k) automatic enrollment.

For the 41% of employees who are enrolled in a company-sponsored retirement plan and responded they would prefer to have someone manage their investments for them, more than half (55%) said they would select lifecycle/target date funds that are handled by a fund manager based upon their estimated retirement year. Employees are also open to seeking help with managing their portfolios. Just over a third (36%) indicated they would select professionally managed accounts with a fee-based financial advisor making investment choices on their behalf, which is up from a year ago according to the Index when only 27% said they would work with an advisor.

The Principal Financial Group commissioned Harris Interactive to conduct an online study of 1,147 full- and part-time employees (ages 18+) of small and mid-sized US businesses (firm size 10 – 1,000) between July 11-18, 2005.