The numbers tell the story
While people are ready to rebuild, they are at different phases in the reconstruction process – some are emerging from the rubble, and some are farther along. According to the latest Principal Financial Well-Being IndexSM (1st Quarter 2010) – a survey of working and retired Americans conducted for The Principal by Harris Interactive – the vast majority of American workers (84 percent) and retirees (71 percent) are beginning to take some action to rebuild their financial well-being. Since the recession began in 2008, Americans said they have started to rebuild by spending less money (62 percent of workers; 54 percent of retirees); paying down debt (45 percent of workers, 29 percent of retirees); and increasing savings in an emergency fund (22 percent of workers; 14 percent of retirees). They also sought online tools or help from a financial advisor to better manage their finances.
But the shift toward taking more personal financial responsibility did not start with the recession, it just accelerated it, O’Keefe said. Even before the crisis, people were behind in their retirement planning, they were spending too much, and they were in debt. Americans learned painful financial lessons as a result of the downturn, including the need to have an emergency fund, save more, pay off debt and protect their assets. As a result, financial behavior is beginning to shift, spurring Americans to rethink their spending and savings habits. Today more Americans say they’re ready to get back on track with their savings and start the new decade on the right financial footing.
Help…I need somebody
The role of the financial advisor is more critical today than ever, O’Keefe said. Two major events have collided to create an enormous need for guidance: 78 million Baby Boomers are approaching and entering retirement just as the worst economic crisis since the Great Depression wreaked havoc on financial security. Yet despite renewed interest in their financial well-being, most Americans still do not quite know how to get there. Most do not have a plan. And they don’t want to go it alone. More Americans want professional financial help through a financial advisor today than just a year ago.
The ‘New Normal?’
It remains to be seen if the shift in consumers’ financial behavior will be permanent, but resources like America Rebuilds provide a place to start. “The battle cry of America Rebuilds is to build on the paradigm shift by giving Americans timely and effective information to help them make planning, saving and investing part of their DNA,” O’Keefe said.
