Americans Say Life - and Work - Goes On; Principal Financial Well-Being Index Reveals American Workers Stay the Course Despite the Year's Upheaval.

Business Editors

DES MOINES, Iowa--(BUSINESS WIRE)--Sept. 3, 2002

In spite of the turmoil and defining events of the past year, American workers appear to be continuing to live their lives and are behaving rationally in regard to their financial well-being, according to the Third Quarter 2002 Principal Financial Well-Being Index.(SM) The Index revealed that respondents are staying the course in a number of areas, including work/life balance and long-term investing behavior.

"The Principal Financial Well-Being Index shows that in general, American workers are reacting to the upheaval of the past year in a sensible, rational way," said Daniel Houston, senior vice president of The Principal(R). "The fact that Americans are planning, sticking with the stock market and heeding time-tested advice regarding long-term investing is all good news."

Labor Day Holiday and Sept. 11 Anniversary

In anticipation of the Labor Day holiday, Americans were asked what motivates them to work and how the events of Sept. 11 may have changed their work/life balance. The latest national survey of 1,600 American workers commissioned by the Principal Financial Group(R) and conducted by Harris Interactive(R) revealed that the vast majority of Americans (81 percent) have not changed their work/life balance since the events of Sept. 11, 2001. Yet a subset of society (12 percent) indicated they now spend more time outside of work as a result, while another 8 percent said they are working more.

When asked what motivates people to work, most noted they work to provide for basic needs (79 percent) and improve their standard of living (66 percent). Other motivating factors included a desire to save for the future (52 percent), achieve personal satisfaction from a job well-done (52 percent), and advance professionally (33 percent).

Planning for the Future

The Well-Being Index revealed that Americans remain concerned about their financial well-being, but this time they appear to be taking action and are increasingly making plans for retirement security. Most respondents, 57 percent, said they are now planning for retirement security, an increase of 12 percentage points from the previous quarter as well as the highest recorded response since the Index was launched nearly two years ago.

"Actions speak louder than words, and Americans have clearly been inspired to sit down and plan for the future, which is a compelling sign of behavior change and perhaps optimism," Houston said.

Sticking with Stocks

In another sign of calm, the study revealed that American workers still believe in the stock market despite its volatility, and are staying in it for the long-term. An all-time Index high of 80 percent of workers, up 7 points from last quarter, have not shifted their retirement savings away from more volatile investments like equities into more stable investments. Most respondents, 69 percent, said they have not changed their asset allocation in response to low investment returns. Yet some (16 percent) did reassess how their retirement savings are invested; others postponed their planned retirement age (9 percent), increased their savings rate (7 percent), or changed financial products (6 percent).

Also evidence of steadiness, the vast majority of Americans (84 percent) said they have not changed their investment behavior as a result of news of corporate scandals. Some (11 percent) did react by reallocating their portfolios, while 4 percent said they saved less and another 3 percent saved more.

Employee Confidence

Fears about job security appear to have decreased slightly this quarter, with 47 percent of American workers ranking it their number one concern, down from 52 percent the previous quarter, followed in priority by long-term financial future (34 percent) and challenging work (19 percent). Workers seem slightly more at ease with the future as fewer respondents said they are "very concerned" with their long-term financial future (71 percent, down from 78 percent last quarter). But only 20 percent of respondents said they are extremely happy with their current financial well-being, the lowest satisfaction level yet recorded.

Employee Benefits

American workers continue to rank health insurance as the most important employer-sponsored benefit and the benefit they most wish their company would improve. When asked to identify needed improvements, the majority of employees noted they wanted lower monthly premiums (63 percent), followed by 48 percent wanting lower co-payments. Employees also expressed a desire for more choice in health insurance plan design, providers and health provider networks. The Index also revealed continued strong interest by workers in other benefits such as pensions and defined benefit plans, which have consistently been rated the number one benefit employees wish they could add to their benefits package, and the most satisfying benefit.

About The Principal Financial Well-Being Index

The Principal Financial Well-Being Index is a quarterly study that identifies and tracks trends in consumer financial well-being, retirement planning, employee benefits and workplace trends. It is conducted by Harris Interactive and commissioned by the Principal Financial Group, the nation's 401(k) leader. The third quarter survey was conducted online among a representative national sample of 1,612 employees of growing businesses (10 to 1,000 employees) from July 26, 2002 to August 9, 2002. The study has a 95 percent confidence level and a range of error of +/- 2.4 percent.

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 mortgage banking through its diverse family of financial services companies. More employers choose the Principal Financial Group for their 401(k) plans than any other bank, mutual fund, or insurance company in the United States(2). A member of the Fortune 500, the Principal Financial Group has $119.6 billion in assets under management(3) and serves some 13 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.

About Harris Interactive(R)

Harris Interactive (www.harrisinteractive.com) is a worldwide market research and consulting firm best known for The Harris Poll(R) and its pioneering use of the Internet to conduct scientifically accurate market research. We combine the power of unique methodologies and technology with international expertise in predictive, custom and strategic research. Headquartered in Rochester, NY, with offices across the United States, in the United Kingdom, in Japan and a global network of local market and opinion research firms, the Company conducts international research with fluency in multiple languages. Press Contact: Nancy Wong, Harris Interactive, 585-214-7316, [e-mail]

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

(2) CFO Magazine, April/May 2002 based on total plans served in 2001 by insurance companies, banks and investment firms.

(3) As of June 30, 2002.