The Index, which surveys both American workers at growing businesses with 10 to 1,000 employees and retired Americans, is released quarterly by the Principal Financial Group® and commissioned by Harris Interactive®.
Dan Houston, president of Retirement and Investor Services at the Principal Financial Group, said, "The findings paint the real story of how Main Street America is reacting to this uncertain economy. At times like these, cooler heads prevail. Fear is a powerful motivator and it’s sending Americans back to the basics - long term view, stay the course, diversify, dollar cost average, take advantage of payroll deduction and automatic savings opportunities. Do not leave money on the table (employer match). Workplace savings is the best thing we have going for us in a recession."
Americans Tighten Their Belts, Adjust Monthly Budgets
The survey indicates that Americans continue to reduce spending because of current economic conditions. Two-thirds of workers and nearly six out of 10 retirees (59 percent) said they have reduced their overall spending during the past two months. Among workers and retirees who said they are on a monthly budget, more than six out of 10 (64 percent and 63 percent, respectively) made adjustments because of fear over the economy, job stability or rising prices.
Tis the Season – or Is It? Reelin’ In Holiday Spending
The Index revealed an unprecedented increase in the survey’s eight-year history showing that Americans are reeling in spending this holiday shopping season like never before. More than half of workers (53 percent) and 49 percent of retirees (both up significantly from 29 percent a year ago) plan to spend less money on holiday gifts this year. While less than half of workers (42 percent, down dramatically from 59 percent) and retirees (47 percent, down from 64 percent) plan to spend the same as last year, only a small percentage of both indicated they would spend more (5 percent and 4 percent, respectively).
Other Key Survey Findings:
Change in Holiday Plans — Because of the economy, workers and retirees indicated they will make the following changes to their holiday plans:
- Fifty-two percent of workers and 41 percent of retirees said they will spend less money per gift.
- Nearly half of workers (49 percent) and about one-third of retirees (31 percent) plan to scale back on the number of people for whom they buy gifts.
- About one-third of both workers and retirees (35 percent and 32 percent, respectively) indicated they will travel less.
- Twenty-five percent of workers and 27 percent of retirees plan to donate less to charities.
- Nearly one-fifth of both workers (18 percent) and retirees (21 percent) indicated they will not host a holiday party.
Monthly Budgeting — Workers and retirees indicated they have cut the following expenses from their monthly budgets:
- Media subscriptions (27 percent workers, 31 percent retirees)
- Gym membership (14 percent workers, 9 percent retirees)
- Landline phone service (13 percent workers, 6 percent retirees)
- Lawn service (12 percent workers and retirees)
- Television services (11 percent workers and 3 percent retirees)
Job Security:
- Forty-one percent of workers are concerned their company will reduce its number of employees in the next year (up from 25 percent last year).
- Ten percent of workers are concerned their company will go out of business in the next year (up from 6 percent last year).
- Less than half of workers (44 percent) said they have no concerns about the future of their company (down from 53 percent last year).
- Thirty-six percent of workers indicated they are considering taking on a second job in order to make ends meet during the economic slowdown and rising costs.
Emergency Funds:
- Fifty-six percent of workers (up from 50 percent last quarter) and 69 percent of retirees (up from 67 percent last quarter) have an emergency fund they can tap if they lose their job or incur an unanticipated major expense.
- Significantly more workers (30 percent) compared with last quarter (23 percent) could cover more than six months of living expenses with their emergency fund.
- Fifty-four percent of retirees compared with last quarter (52 percent) could cover more than six months of living expenses with their emergency fund.
