Social Security Turns 70 — The Principal Financial Group Reflects on Contributions of Social Security, Recommends Workers and Retirees Alike Examine Their Financial Futures

Business Wire, August 4, 2005

Retirement Security Action Steps for All Americans

The Principal urges all Americans to discuss their retirement security plan with their financial professionals, and take the following steps:

--Determine your desired retirement date.

--Determine amount of monthly income expected from Social Security and any company pension plans that you might be eligible for.

--Based on preferred retirement lifestyle, begin developing a monthly expense budget.

--Don't overlook potential new expenses such as health insurance, long-term care and prescription drugs. Not having this coverage can turn a catastrophic health event into a retirement funding catastrophe as well.

--It's likely step 3 will be greater than step 2, so you'll need to fund the gap with personal retirement savings (401(k) plans, IRAs, regular savings).

--A 4% annual withdrawal rate is suggested to help ensure your savings will last for 20, 30 or more years. (Multiply monthly shortage by 12 to determine annual shortage. Then multiply annual shortage by 25 to determine total assets required to support 4% withdrawal rate).

--If you don't have sufficient personal savings, here are some additional actions to consider:

--Increase your retirement savings rate if you still have a number of working years ahead of you.

--Delay your retirement date (this has a compound effect of: providing additional savings opportunity, reduces earlier withdrawals on savings and increases Social Security payment if delayed).

--Work part-time in retirement to reduce/delay the drawdown of personal savings.

--Revisit your lifestyle expectations in order to reduce expenses.

About the Principal Financial Group

The Principal Financial Group(R) (The Principal(R))(1) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $187.8 billion in assets under management(2) and serves some 15.2 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

(1) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

(2) As of June 30, 2005