CHARLOTTE, N.C.--(BUSINESS WIRE)--Overall U.S. investor optimism has plummeted to -8, down from +16 recorded in July and +24 in May according to the quarterly Wells Fargo/Gallup Investor and Retirement Optimism Index conducted November 9-17, 2012. The dip in sentiment is comparable to the -9 index recorded in November 2011, and is linked to pessimism about the overall economy. More than half (59%) say now “is not a good time” to invest in the markets, an increase from 48% recorded in May. Sixty-eight percent say they have “little to no” confidence in the stock market as “a place to invest for retirement.”
Among a list of eight factors, 69% of investors ranked the deficit and divided government as the top factors “hurting” the investing climate “a lot,” followed by unemployment (67%) and the global economic slowdown (63%).
Seventy-two percent of investors say it is “somewhat likely” to “very likely” that the automatic tax increases and spending cuts of the “fiscal cliff” will be pushed out six to 12 months to give the President and Congress more time to negotiate. Seventy percent say the country will go into recession in 2013 if “fiscal cliff” issues are not resolved. Over half of investors (54%) say the outcome of the Presidential and Congressional elections have made it “more difficult” to save for retirement.
“No question about the fact there is a gloomy sentiment among investors right now, and it looks like it’s connected to a belief that the elections will result in more Washington gridlock. The fact that 80% of investors say we need a national effort in place to encourage Americans to save is eye opening. Clearly, people want to feel like they have the wind at their backs and the tools to increase savings,” said Joe Ready, director of Institutional Retirement and Trust at Wells Fargo.
The 401(k) is Very Important
Eight in 10 investors (83%) say the 401(k) and similar tax-advantaged accounts are “extremely” important (43%) or “very” important (40%) to the ability of Americans to retire comfortably in the future. Investors were asked how important it is for the President and Congress to undertake actions to enhance the 401(k), and investors conveyed the following:
- 69% say it is “extremely” or “very important” that the government find ways to financially encourage every company to offer its employees a 401(k) retirement savings option;
- 69% say it is “extremely” or “very important” that the government find ways to financially encourage every American to participate in their employer’s 401(k) retirement savings option;
- 66% say it is “extremely” or “very important” that the government find ways to allow Americans with 401(k) retirement savings to obtain more quality investment advice;
- 66% say it is “extremely” or “very important” that the government find ways to allow Americans more investment flexibility with their 401(k) retirement savings.
When investors were asked whose responsibility it is to see that Americans have the opportunity to build savings for a comfortable retirement, over half (58%) say it is a “shared” responsibility between government, business (in the form of a pension), and the individual. About a third of investors (36%) say the individual on his/her own is responsible.
Saving Should Be a National Priority
A majority (80%) of investors say the Administration should make it a national priority to encourage Americans to save.
Over three-fourths (76%) of investors say the current administration should make strengthening Social Security so that it exists for future generations a priority over the next four years.
Further, the poll asked investors to rank responsibility levels for teaching Americans to save: 88% of investors point to parents and family as having a “great deal” or “quite a lot” of responsibility, 84% indicate individuals on their own, and rounding out the top three, 67% of investors point to financial advisors as having a “great deal” or “quite a lot” of responsibility to teach saving. Other groups that were cited were bankers (60%), teachers (55%) and employers (48%).
Sixty-nine percent of investors say they are “somewhat” to “extremely” worried they will outlive their savings in retirement while 68% are “somewhat” to “extremely” worried they will experience a large reduction in their standard of living during retirement, and 56% are worried they will be forced to work during retirement to maintain their standard of living.
Perceptions of the Stock Market
A plurality of investors (45%) say the outcome of the November elections will cause the stock market to go down, while only 15% say the markets will go higher. Thirty-nine percent say the elections will leave the markets where they are now.
Although a majority of investors are not confident in the stock market, about half (52%) say they have not reduced their investments in the markets, while 45% say they have.
Investors who have pulled money out of the market were asked if they “regret” doing so over the past four years, and 67% say they have “no regrets.” Seventy percent say they plan to leave their exposure in the market unchanged, while 20% say they will increase their stock holdings.
Planning and Confidence
Over half of investors (55%) say they have taken the time to do a calculation about their future retirement needs, while 43% say they have “guessed” at the savings they will need. Thirty-seven percent of all investors say they have a specific written plan for retirement, up from 31% in July and 28% percent in May.
Seventy-six percent of non-retired and 72% of retired Americans say having a financial plan with specific goals and targets gives them “confidence” they’ll meet their financial goals.
When asked why they did not have a specific financial plan for retirement, 44% of the non-retired cite “not having enough money” as the main reason, while 18% say they did not have the time to make a plan, and 12% say they did not need a plan.
Perception of the Election and Presidential Priorities
Investors are divided in their view of whether to be optimistic about the economy based on the outcome of elections: 40% are “more optimistic” while 48% are “less optimistic.”
Eighty-five percent of investors say they have “little” to “no confidence” that Congress will be able to achieve goals in the next term. Only 14% of investors think the Congress will accomplish its goals. Fifty-six percent say they have “little” to “no confidence” that the President will be able to achieve his goals in the next term versus 43% who believe he will.
Investors say the President and the Congress should make the following priorities the top three to address in 2013: the creation of new jobs (89%), addressing the federal deficit (82%) and addressing international terrorism (68%).
About the Wells Fargo-Gallup Investor and Retirement Index
These findings are part of the Wells Fargo-Gallup Investor and Retirement Optimism Index, which was conducted November 9-17, 2012. The sampling for the Index included 1,024 investors randomly selected from across the country with a margin of sampling error is +/- three percentage points. 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. About two in five American households have at least $10,000 in savings and investments. The sample size is comprised of 74% non-retired and 26% retirees. Of total respondents, 61% had reported annual income of less than $90,000 and 39% of $90,000 or more. The Wells-Fargo Gallup Investor and Retirement Index is an enhanced version of Gallup’s Index of Investor Optimism that provides its historical data.
The Index had a baseline score of 124 when it was established in October 1996. It peaked at 178 in January 2000, at the height of the dot-com boom, and hit a low of negative 64 in February 2009.
About Wells Fargo Wealth, Brokerage and Retirement
Wells Fargo Wealth, Brokerage and Retirement (WBR) are one of the largest wealth managers in the U.S., with $1.3 trillion under management. WBR includes Wells Fargo Advisors, the third-largest brokerage in the U.S.; Wells Fargo Private Bank, serving high-net-worth individuals and families; Wells Fargo Family Wealth, serving ultra-high-net-worth families; and Wells Fargo Retirement, which manages $231 billion in 401(k) assets for 3.5 million Americans. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company.
About Wells Fargo (Twitter @WellsFargo)
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.2 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com and wachovia.com), and other distribution channels across North America and internationally. With approximately 280,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 23 on Fortune’s 2011 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.
For more than 70 years, Gallup has been a recognized leader in the measurement and analysis of people’s attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup’s current activities consist largely of providing marketing and management research, advisory services and education to the world’s largest corporations and institutions.
Note: Complete survey results and a chart showing the index movement are available upon request.