Recent declines in the stock market may be due to the deep dive in oil prices, but they’re also supported by investors who are jittery about market volatility and not all that optimistic about the market’s direction.
The latest Wells Fargo/Gallup Investor and Retirement Optimism Index has a reading of +59 in the fourth quarter, up just one point from the third quarter and down 11 points from the first half of the year. Looking longer term the index is up 11 points from a year ago but sits almost dead center in the range over its 19-year history. The latest reading is based on a survey of 1,018 investors conducted between Oct. 30 and Nov. 8, before the latest market drop.
Retirees are the most pessimistic. Their optimism index measured +47, down 23 points from the third quarter, while the optimism index for non-retirees rose 10 points to +63. This is the first time in over a year that non-retirees are significantly more optimistic than their retiree counterparts, according to the survey. Retirees are “concerned about the purchasing power of their retirement savings,” Zar Toolan, director of advice quality for Wells Fargo Advisers, told ThinkAdvisor.
That’s not surprising since 42% of retirees said they want to live off the interest of their investments along with Social Security and other income while 35% said they’re spending carefully so that their savings last; only 18% were adding to those savings.
Fifty-seven percent of investors have little or no confidence in the stock market as a place to save and invest for retirement, while 43% have a great deal of confidence in stocks for that purpose.