Data & Research September 3, 2009

Emergency Funds Would Run Out Quickly

Six in 10 surveyed Americans said they could last financially for 90 days or less without a job, while 38% said their nest egg wouldn’t make it for four weeks.

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A news release from HSBC Bank USA about its poll said 39% of respondents reported being able to live on their savings for three to six months if unemployed.

“While we have seen a robust increase in the personal savings rate in 2009, and we are moving in the right direction, what is clear is that it’s not enough,” said David Goeden, executive vice president, Personal Financial Services, HSBC Bank USA, N.A. “More than ever, Americans are aware of the importance of having an emergency fund; yet, despite this heightened awareness—and rising unemployment rates—there is still a sweeping lack of preparedness for the unexpected.”

Fifty-one percent of respondents with a household income (HHI) of less than $50,000 could only live on savings for less than one month. Despite a higher income, 29% of respondents with a HHI of more than $100,000 could only live on their savings for up to three months.

Those who are prepared for less than one month include families with children (44%) and adults age 55 and older (31%).

When asked what they would do if they unexpectedly received $1,000, 63% said they would pay bills, and nearly 40% said they would put all or the majority into savings.

The HSBC Consumer Survey was conducted online in July among 1,000 U.S. households. The sample size varied per question.

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Data & Research September 3, 2009

Benefits Choices Hold Steady Despite Economy

Despite the tough economy, nearly nine in 10 employees are planning to maintain or increase the number of benefits they select and/or their coverage for next year, according to MetLife's 2009 Open Enrollment Poll.

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A MetLife release said only 11% of workers plan to decrease their 2010 benefits coverage, and nearly one-quarter of those planning to decrease coverage this year indicated they will increase their benefits during next year’s open enrollment period if the economy improves.

More than one-third (37%) said their household’s discretionary income decreased this year.

“Recent economic events have caused many to be more mindful and appreciative of the benefits provided to them at work, which often form the foundation of their personal safety nets,” said Ronald Leopold, vice president for MetLife’s U.S. Business. He added that the low number of employees who plan to pare back when it comes to selecting benefits for 2010 “shows that they continue to value their benefits as essential to helping them plan for the future while protecting themselves and their families.”

Eighty-nine percent of respondents said they are somewhat or very confident in their ability to evaluate their options and pick the right employee benefits for themselves and their families. Three-quarters of employees (76%) plan to spend approximately the same amount of time this year as last when it comes to selecting their benefits. Only 3% of all workers surveyed said that they are not confident in their ability to evaluate their options and select the right benefits.

Thirteen percent of employees reported they plan to spend more time on their benefits decisions during this year’s open enrollment period. Nearly two-thirds of them (64%) indicated this was because of current economic events/financial security, and 31% cited a major life event. In addition, 15% said think they made some wrong decisions on the employee benefits they selected during last year’s open enrollment.

According to MetLife, employer communication makes a notable difference in employee engagement in their benefits decisions. Of employees who say they will spend more time making benefits decisions this open enrollment season, 29% said their employer has been communicating more about the importance of employee benefits.

MetLife recommends total compensation statements, decision support tools (such as Web-based calculators), personalized materials based on employee life stages and events (see “Zooming In” http://www.planadviser.com/MagazineStory.aspx?id=6364&article=3), and multiple communication channels.

Furthermore, MetLife recommends using off-cycle enrollment: More than one-third of employees (38%) would be interested in learning about and modifying their benefits choices more frequently than once a year, the Open Enrollment Poll found. One solution is an off-cycle enrollment period with a focused enrollment on one single benefit. That could result in higher enrollment rates, and greater employee benefits satisfaction and confidence in open enrollment decisions, MetLife said.

The Open Enrollment Poll surveyed 1,000 full-time employees by telephone in late July.

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