American investors are less optimistic about maintaining household income and reaching their short- and longer-term investing goals than they were a year ago, according to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index, released Tuesday.
The index, which measures U.S. investor confidence in the investing climate, fell to 85 for the second quarter, down from 103 during the same period in 2018.
Sixty-one percent of investors said recent stock market performance had made them concerned that the market was peaking.
Another recent poll found investor and advisor optimism waning since the start of 2019 because of market volatility.
Six in 10 investors in the Wells Fargo/Gallup study described the economy as solid or booming, but many sensed a recession in the offing. Eleven percent said one would begin later this year, and 40% said it would start in 2020.
However, 72% of retirees and 64% of non-retirees considered themselves prepared for how they would handle their investments in the event of a recession.
“It is good to see that two-thirds of investors feel they are prepared to handle their investments during a recession,” Tracie McMillion, head of global asset allocation strategy for Wells Fargo Investment Institute, said in a statement.
“While we do not see a recession in the near term, in many ways we are still recovering from the last one — which left a deep scar on many investors. This sense of preparedness is a positive sign.”
The Index of Investor Optimism has an adjusted baseline score of 100 from when it was established in October 1996. It peaked at +152 in January 2000, and hit a low of -81 in February 2009.
The index results were based on a Gallup Panel web study completed in May by 1,240 U.S. investors, defined as adults in a household with stocks, bonds or mutual funds of $10,000 or more, either in an investment account or in a self-directed IRA or 401(k) retirement account. (About two in five U.S. households have at least $10,000 in such investments, the report said.)
The sample comprised of 71% non-retirees, whose median age was 46, and 29% retirees with a median age of 68. Of total respondents, 58% reported annual incomes of $90,000 or more, and 42% reported less than $90,000.
Looking Forward to Retirement
Three-quarters of investors in the survey said they had put a lot or a fair amount of thought into achieving their financial, family and lifestyle goals in retirement, compared with only 46% who said they had given the same thought to planning their life during their working years.
“It’s fascinating that investors have given so much more thought and planning to their retirement years than to their working years,” McMillion said. “Those working years are the ones when people are making lots of decisions about work, raising families and buying homes, and planning could be helpful.”
A gender gap appeared in the latter instance, but not in the former one. Fifty-two percent of men in the survey versus 38% of women said they had given at least a fair amount of thought since entering work to how they would achieve their career, financial, family and lifestyle goals during this phase of life.
By contrast, 77% of men and 73% of women said they had given considerable thought and planning to retirement.
The Gallup poll asked non-retirees which of five possible factors gave them the most trouble when planning for retirement. Ranked first was not knowing how much money they would need to maintain their standard of living, closely followed by health care. Not knowing how long they would live came in third.