Optimism Index Shows Retirement Savings Worries

August 6, 2014 (PLANSPONSOR.com) – The Wells Fargo/Gallup Investor and Retirement Optimism Index slipped eight points in the second quarter to reach +29, driven by increased pessimism among retirees.

The fall from +37 at the beginning of the year was 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.

Still, the majority of investors surveyed by Wells Fargo and Gallup believe that the “American Dream” is still attainable, despite concerns about saving for retirement. Approximately 84% of investors who were surveyed note that the American Dream is achievable. According to the index results, investors view the dream as the ability to afford a home (93%) and enjoy a successful retirement (92%), while also having a good job prior to exiting the work force (92%).

The survey revealed that 76% of Americans have a standard of living they consider to surpass that of their own parents. Nearly nine out of 10 non-retired investors said they are optimistic they will achieve the American Dream, versus 77% of retired investors. Researchers say this reflects the overall optimism of preretirees in the survey.

Joe Nadreau, head of innovation and strategy at Wells Fargo Advisors, notes that it’s not unreasonable for investors to openly pursue the American Dream. “The American Dream remains a pretty simple concept among investors: A home, a good job, and money to live on later in life,” he explains. Pursuing these goals is a reasonable formula for financial stability, he says. 

But despite the optimism about the American Dream, about half of the preretiree investors in the survey (47%) were either “extremely” or “somewhat” worried that they have not saved enough to be able to retire. Meanwhile, about a third (29%) were a “little worried,” while 24% were “not worried at all.”

Around 46% of all investors, including both the retired and non-retired respondents, were worried that they won’t have enough money to last throughout retirement. This includes 19% who were “extremely worried.” On the contrary, 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,” Nadreau explains. “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.”

The index results also show most investors who own stocks are open to professional guidance, be it in person, on the phone, or collaboratively in the digital space. In fact, of the eight in 10 investors who reported owning individual stocks or mutual funds, 71% said they prefer consulting with someone who can give them expert or professional advice, compared to 27% who said they feel confident about
investing in the market on their own.

Overall, roughly one-third of investors (32%) sought more financial advice in the last two to three years, and nearly 40% indicate they would increase the advice they seek in the next two to three years.

— Matthew Miselis

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