Wells Fargo Index: Investor Optimism Dips in Second Quarter, Driven By Retiree Concerns about Economy

Jo-Carolyn Goode | 8/6/2014, 3:42 p.m.
• Non-retirees bullish on investment technology, financial advice, but worried about having enough in retirement • Eight in 10 say ...

ST. LOUIS, MO. August 6, 2014 – The Wells Fargo/Gallup Investor and Retirement Optimism Index slipped eight points in the second quarter to +29 from +37 in February, driven largely by a 17-point decline (from +41 to +24) in optimism among retired investors, whose view of inflation and economic growth deteriorated during the quarter.

The optimism of non-retirees remained essentially unchanged, at +31, versus +35 in February, according to the quarterly survey of 1,036 investors, aged 18 and older conducted June 27 through July 9, 2014.

Despite having ambivalence about the economy and investing, 84% of the investors surveyed said the American Dream is achievable. Their definition of the dream included the ability to afford a home (93%), living comfortably in retirement (92%) and having meaningful employment (92%). Least cited: having a standard of living surpassing that of their parents (76%).

Nearly nine out of 10 non-retired investors said they are optimistic they will achieve the American Dream versus 77% of retired investors, reflecting the overall optimism of non-retirees in the survey.

“The American Dream remains a pretty simple concept among investors: a home, a good job, and money to live on later in life,” said Joe Nadreau, head of Innovation and Strategy at Wells Fargo Advisors. “While retirement gives some investors pause, most still view the American Dream optimistically and are taking steps to realize it.”

Having Enough Money in Retirement Still a Concern

Though most saw a secure retirement as fundamental to realizing the American Dream, about half of the non-retired investors in the survey (47%) were either “extremely” or “somewhat” worried that they have not saved enough to be able to retire. About a third, (29%) were a “little worried,” while 24% were “not worried at all.”

Similarly, 46% of all investors – retired and non-retired – were worried they won’t have enough money to last throughout their retirement. This includes 19% who were “extremely worried.” By contrast, 20% were “a little worried,” and 29% were “not worried.”

“About half of investors worry about whether they’ll be able to retire, and if they do, whether they’ve saved enough to last through retirement,” said Nadreau. “Regardless of where they are in their lives and how much they make, investors can allay these concerns with a clear saving-and-investment strategy.”

Saving and Investing: What Would You Do With $10,000?

When asked what they would do with an extra $10,000 to save or invest, 41% of investors said they would invest money in the markets, while a majority (56%) said they would keep it as cash or saved in a CD.

The conservative response tracked with 59% of investors who said the financial market is a “fair” to “poor” place for average Americans to grow wealth, despite 2013’s historical market gains. This view was more widely held (69%) among investors with less than $100,000 in investable assets.

Two-thirds of investors (67%) said they are “highly knowledgeable” or “somewhat knowledgeable” about investing, about the same percentage that correctly answered that the stock market rose in 2013, when asked whether the markets increased, decreased, or stayed the same last year. However, just 7% of investors said they knew the markets had an average return of 30% in 2013, based on S&P 500 returns. Of those who knew the market rose in 2013 (37%), the majority thought the market increased only 10%, while another 17% thought it rose 20%.