Despite Ebbing Economy, Workers Plan to 'Stay the Course' with Retirement Investments - Brief Article

HR Magazine, July, 2001 by Bill Leonard

A large majority of U.S. workers are holding tight to their investment strategy and currently have no plans to move their savings to more stable investments because of a fluctuating stock market and weakened economy, according to a recent poll conducted by The Principal Financial Group.

However, the slowing economy has eroded the confidence of U.S. workers. Eighty-five percent of those surveyed reported that they are "very concerned" about their financial future--an increase of 11 percentage points from last year. Yet 86 percent of respondents reported that they saw no immediate need to change their financial strategies and move their retirement savings into less volatile and lower-risk investment vehicles.

"The results of our study suggest that, despite increased anxiety among U.S. workers over the unsettled economy, they are remaining composed when it comes to investing for the long term," says Dan Houston, senior vice president for The Principal Financial Group. "Investors have become increasingly sophisticated and more emotionally immune to roller-coaster rides on the stock market."

The report revealed that most workers expressed dissatisfaction with their current state of financial well-being, and that employees are spending more time thinking about their financial health. The majority of respondents, 59 percent, said that they are not yet happy with their current financial state, an increase of 5 percentage points from last year, and 65 percent think about their financial future at least once a month, another increase of 5 percentage points.

"It's also disturbing to hear that almost a third of those we surveyed hadn't even begun to plan for retirement," Houston says. "With time and the impact of compound interest, contributing just 6 percent of your salary to a 401(k) program can grow into several hundred thousand dollars over 20 years."