Recent findings from the Wells Fargo/Gallup Investor and Retirement Optimism Index show that the number of pre-retirees claiming to have a financial plan in place centered around their retirement and investment goals rose from 29 per cent in March to 39 per cent in August. 

The index as a whole dropped to +33 in the third quarter from May’s reading of +43, as optimism among retired and non-retired investors dropped 18 points to +14 and five points +40 respectively.

In other findings - pointing to what the firm described as a “positive trend for retirement preparation” -  60 per cent of investors said they have taken the time to estimate how much they should save now to retire comfortably, up from 53 per cent in May and 45 per cent in March.

The point in time at which one begins saving for retirement and how much is saved each year are “extremely” or “very important” factors in ensuring a comfortable retirement, according to 84 per cent of respondents. Other important factors cited include selecting the right investment funds (75 per cent), the amount of investment gains made each year (70 per cent) and having low fees on investment funds (62 per cent).

Economic outlook

Four in ten non-retired investors said they are “extremely” or “very worried” about a potential repeat of the global financial crisis and recession in their retirement years. This outweighs concerns about having a lower standard of living (28 per cent), running out of money (26 per cent) or having to work in retirement (25 per cent).  

“Over the summer, investors watched rising mortgage rates, a volatile stock market and stubborn unemployment figures – all of which understandably impact optimism. What is so striking to me is the fact that five years after the market collapse, non-retired investors harbor significant concerns about a repeat financial crisis. The past continues to color their view of retirement, and whether the stock market is a place where they can invest and grow savings,” said Ready.  

A majority (69 per cent) of investors said this year’s stock market increases do not make them any “less fearful about sustained losses” if the market were to fall similar to the 2008-2009 downturn. Meanwhile, 59 per cent of retired and 51 per cent of non-retired investors said they haven’t seen a “noticeable increase” in their retirement account values as a result of such increases; only 14 per cent feel “a lot” or “somewhat” more confident.

When asked to state what would encourage them to invest in the stock market, 60 per cent of respondents cited lower unemployment and a stronger economy. Having a “greater personal understanding of the stock market” was mentioned by 41 per cent.

Survey

The findings are part of the Wells Fargo-Gallup Investor and Retirement Optimism Index, conducted August 14-21.

For this study, the American investor is defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more. Of total respondents, 58 per cent had reported annual income of less than $90,000 and 42 per cent of $90,000 or more.