Workers, retirees worried about finances: Survey

American workers and retirees are more hopeful about the economy now than they were in the third quarter, but both groups remain worried about their own finances, according to a survey released today.
Twenty-nine percent of employees said they are “optimistic” about the economy, up from 21% in the third quarter, according to the Principal Well-Being Index released today by the Principal Financial Group. The percentage of retirees who are similarly upbeat doubled from the third quarter to 24%.
Principal surveyed 1,159 employees and 528 retirees. Surveyed workers consisted of those working at small and midsize U.S. businesses with 10-1,000 employees.
The survey, however, showed that most respondents — 72% of workers and 56% of retirees — are “very concerned” about their long-term financial future.
Their fears tend to subside when they’re empowered to help themselves financially through programs such as auto-enrollment and auto-escalation in their 401(k) plans at work, according to Larry Zimpleman, chairman, president and chief executive of Principal.
“They’re trying to take control of their own destiny,” Mr. Zimpleman said in a conference call with reporters. “Employees are ready to take on this responsibility and rebuild their own financial future.”
Only about 4% of those surveyed, however, are turning to investment advisers for help.
“They’re much more willing to talk to in-laws or neighbors than they’re willing to seek out a financial adviser,” Mr. Zimpleman said.
The situation is changing as employers set up automatic enrollment in 401(k) plans as authorized by the Pension Protection Act of 2006. They’re also offering information and even guidance on investments.
“We will be seeing improvement in this area, albeit slowly,” Mr. Zimpleman said.
Steve Bartlett, president and chief executive of the Financial Services Roundtable, said that most investors should consult an adviser.
“We see it as a growing occupation, but it is far short of what the American people need,” Mr. Bartlett said.
When clients do visit their advisers, they’re likely to ask them how they can stretch their financial foundation to cover what could be more years in retirement than they spent working.
“We’re starting to see strong consumer interest in guaranteed lifetime income,” said Chris Blunt, executive vice president for retirement income security at New York Life Insurance Co.
People are looking to annuities for income to augment Social Security, which may not be able to provide the present level of benefits in years to come, he said.
“It gives them psychological fortitude and the courage to invest …with the rest of their money,” Mr. Blunt said.
Sometimes projections of the demise of Social Security can be overblown, Mr. Zimpleman cautioned. The entitlement program won’t cease to exist, but by around 2035, its payout rate would be reduced by about 30% if it stays on its current trajectory.
Mr. Bartlett said that Social Security reform must be part of any deficit reduction plan that Congress considers. He advocates changing the calculation for benefit increases, adjusting contribution levels and raising the retirement age.
“Americans are aware that Social Security is likely to change in the future,” Mr. Bartlett said. “The basic safety net is pretty basic and doesn’t provide the quality of life that Americans want in their retirement.”
In conjunction with the Principal survey of attitudes toward investing and retirement, the Financial Services Roundtable released a guide (http://www.fsround.org/media/pdfs10/11for11FINAL.pdf) entitled “11 things to know about investing in 2011.”