Contributions to 401(k)s increased in the last year, Principal Financial found in a survey of 1,159 employees and 529 retirees in October.

Eighteen percent said they have increased their contributions, up from 13% that said they had done so in the fourth quarter of 2009.

Meanwhile, 45% of workers and 43% of retirees are either very concerned or extremely concerned about the future of Social Security. And 32% of retirees said Social Security is their primary source of income, and 38% said it is their secondary source of income.

When asked how they would manage if Social Security were to fail, 46% of workers said they would remain in the workforce longer, up significantly from 40% in the fourth quarter of 2007. Twenty percent said they would phase into retirement, and 14% said they would lower their standard of living.

“With mounting worries about Social Security, it appears that fewer workers are staking their future on the system and are considering alternative, which for many means putting more money in a defined contribution plan,” said Luke Vandermillen, vice president of retirement and investor services at The Principal.

He also noted that the fact people are saving more money for retirement rather than dipping into savings is also an indication that the economy is improving.

In fact, asked about their views on the economy, 40% of workers and 39% of retirees think the economy will improve next year, and 31% are extremely happy with their current financial well-being, up from 19% in the third quarter of this year. And 29% of workers are optimistic about the economy and their ability to rebuild their finances, up from 21% in the last quarter.

“We are seeing some confidence return as Americans are starting to feel better about their finances and the economy, which is resulting in some positive behavior for long-term savings,” Vandermillen said. “While the road may still be bumpy, many Americans are taking personal responsibility to improve both their short- and long-term financial well-being.”

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