The FINANCIAL — The Wells Fargo/Gallup Investor and Retirement Optimism Index rose to +43, a surge of 12 points since March and the highest level in two and a half years, according to Wells Fargo.
Investors are more optimistic about their ability to maintain incomes over the next 12 months. Optimism is especially high among non-retired investors at +45, the highest in two and a half years. Optimism also increased among retired investors, up 25 points since March to +32, according to Wells Fargo.
Despite higher optimism, over half of investors (54%) say they have not “personally” benefited much from the stock market’s rise: 33% say they’ve benefited “a little” and 21% say they haven’t benefited “at all.” About four in 10 investors (43%) say they have “personally” benefited “somewhat” or “quite a lot” from the stock market’s increase. Investors are almost evenly divided on whether the rising stock market helps the “average” American “by increasing the value of pension funds and 401(k) accounts.” Forty-nine percent say market increases benefit the “average” American while 47% do not, according to Wells Fargo. The median age of the non-retired investor is 46 and the retiree is 69;
“Investors are ambivalent about whether the rising stock market benefits them. History shows that investors who save and invest regularly based on a plan do benefit from rising stock market values, but at this point, most average investors don’t see a strong connection between the markets and their financial well being,” said John Papadopulos, president of Wells Fargo Retirement.
Real estate is cited by 35% of non-retired investor as their top investment choice for investing with a ten-year horizon out of bonds, equities, gold and savings accounts, while 45% of retired investors say stocks would be their top choice, according to Wells Fargo.
In the second quarter, 87% of investors say they made “no changes” to their stock market allocations, while 10% increased stock market investments. Of those who did not invest more in the stock market, about half (49%) say they didn’t because they are a “long term investor” and “not inclined to change” and a third of investors (29%) say they did not increase investments due to “a lack of resources.”
Two-thirds of investors say they foresee a market correction this year, but 80% say this has not impacted their stock allocations.
Thirty-eight percent of all investors attest to having a written plan for retirement, which is up significantly from 32% a year ago. A quarter of all retirees surveyed say their life in retirement is “somewhat worse” or “much worse” than what they expected, according to Wells Fargo.
Among all investors, 43% think saving for retirement should be mandatory for working Americans while 56% do not agree with this measure. Forty-seven percent of retired investors believe saving for retirement should be mandatory as compared to 42% percent of non-retired investors.
“Retirees who talk about life in retirement being ‘worse’ than they anticipated is telling. Their assessment drives home the point that planning and saving make a meaningful difference in how retirement will turn out,” said Papadopulos.
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