Infographic: Wells Fargo/Gallup Investor And Retirement Optimism Index First Quarter 2014 (Graphic: Business Wire)

The Wells Fargo/Gallup Investor and Retirement Optimism Index jumped 12 points in the first quarter, rising to +37 in February from +25 in November 2013. The positive sentiment approaches the +43 of last May before the budget brinksmanship and partial government shutdown lowered investor optimism last fall. The survey of 1,011 investors was conducted February 6-16, 2014.

The first quarter rise in optimism is due almost solely to a 35-point surge in optimism among retired investors to +41, from +6 last November. By contrast, optimism among non-retired investors held steady at +35, similar to their +32 in November.

Higher optimism among retirees stems from heightened confidence about matters affecting their personal finances. Retirees say they are more upbeat about their ability to “maintain or increase” their current income level over the next year, and they are also more optimistic about the stock market.

“It is both interesting and encouraging to see that retirees are more optimistic,” said Joe Ready, director of Wells Fargo Institutional Retirement and Trust. “Dating back to May of 2012, retirees have responded to this poll every quarter with much more pessimism about their situation than have the non-retired — this is a real shift, and most likely correlates to the combination of a stronger stock market and the prospect of higher interest rates in the future.”

Majority of Investors Want Increased Tax Deferral Limits on Retirement Accounts

President Obama has indicated that in his 2015 budget, the Administration will propose to lower limits on the tax deferred money that flows to retirement accounts. However, nine out of 10 investors (91%) say they want to see an increase in the amount that people can save in a tax deferred retirement account. While investors seek the incentive to save more, they do not support the idea of increasing tax penalties on investors who withdraw money from their accounts before retirement age, with 78% saying they would oppose such a policy.

A majority of investors (57%) also believe the existing retirement vehicles, including the 401(k) and IRA, provide enough options to Americans versus 40% who think more choices are needed. However, this gap widens among those with access to a 401(k)-type plan: 62% say available retirement vehicle options are sufficient; 37% say more types are needed. Among those without access to a 401(k)-type plan 49% say available options are sufficient, and 46% say more types are needed.

“Nine out of 10 investors are telling us the tax deferral status of retirement accounts is something that is important, and they want to be able to put away more money on a tax deferred basis. People respond positively to this incentive, and we need to continue to encourage saving as a country,” added Ready.

Investor Caution about the Stock Market Persists

Given the strong stock market of 2013, investors were asked if looking at their retirement account balances makes them feel more confident about their retirement future. Among all investors, 40% say their outlook for retirement is “no different,” while over a third (36%) report they are “a lot more” or a “little more” confident about the future. When analyzing the responses of retired investors, 40% say their retirement outlook is “a little” to “a lot more” confident than it has been, as opposed to 35% among the non-retired; whereas 36% of the retired and 41% of the non-retired say looking at their accounts has caused “no difference” in their outlook.

Also among all investors, 55% say the “uneven distribution of wealth” in the country is a “major problem” and among non-retired investors, a third (34%) say income inequality will make it “harder” for them to retire.

Despite a bull market in 2013, 62% of investors report that their fears about sustaining significant losses in a repeat of the 2008/2009 stock market downturn have not eased. Just a third (30%) of all investors say that last year’s market gains have made them less fearful of a significant market downturn, which is unchanged since last summer.

“In the past five years of recovering from the depths of our recession, 2013 was a banner year for stocks, but it does not appear to have mitigated the strong skepticism that I think still exists among average investors; investors appear willing to trade off double-digit stock market growth to avoid the risk of bruising losses so many experienced in 2008 and 2009,” said Ready.

A majority of investors — 64% — indicate that if given a choice, they would rather have a guarantee that their retirement investment is “secure,” even if that means lower growth potential. Conversely, 33% say it is more important to have “high growth” potential, even if there is some risk of losing the initial investment. The avoidance of risk is even more pronounced for retirees, with 78% saying they would rather have a guarantee of security on their principal than take some risk and have higher growth potential, versus 59% of non-retired investors.

Investors Prize Financial Knowledge – Majority Say They Have It

The poll reveals that most investors consider themselves highly knowledgeable about retirement planning: 65% describe themselves as “extremely” or “very knowledgeable” as compared to 34% who say they are “somewhat or not too knowledgeable.”

Further, 45% of all investors identify “having a lot of personal knowledge about investing” as the most important characteristic, among several choices, that contributes to being a highly successful investor. This is followed by “having top-notch investment advisors” at 34%, and “starting off with a lot of money” at 17%.

There is a generational difference on the answer to the questions about what makes a successful investor. Fifty-four percent of investors under age 50 are more likely than investors 50 and older (38%) to say having personal knowledge is the key to successful investing.

“It is highly encouraging that a majority of younger investors value knowledge and see it as necessary to successful investing,” said Ready. “Younger investors are living at a time when preparing for retirement falls on the individual, and knowledge is critical to the process.”

Over half of investors (58%), unchanged from the last time the question was asked in August, believe the stock market will experience a correction this year that will take back significant gains. A majority of investors (70%) say that if there is a stock market correction this year, they will ride it out by holding their investments, while 20% say they will use the correction as a buying opportunity to invest more in the market. Less than 10% say they would exit the market.

“Investing in the stock market is for the long-term, so riding out market volatility or using a market correction as a buying opportunity is savvy,” said Ready.

In the survey, investors were asked if they would choose “expert advice and coaching” to create a plan to reach optimal health and/or weight management goals or to create a financial plan to reach retirement savings goals. Fifty-four percent say they would choose the financial health route as opposed to 41% who would choose coaching and planning to reach optimal weight and health goals. However, this picture looks different for retirees: 48% say they would choose help to create a plan for better health versus 39% who would choose help creating a financial plan. For non-retirees, 59% would choose help and coaching to create a financial plan versus 38% who would choose help with weight and health goals.

About the Wells Fargo-Gallup Investor and Retirement Optimism Index

These findings are part of the Wells Fargo-Gallup Investor and Retirement Optimism Index, which was conducted Feb. 6-16, 2014, by telephone. The sampling for the Index included 1,011 investors randomly selected from across the country with a margin of sampling error of +/- three percentage points. American investors are defined as adults in households with an investment or retirement account valued at $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 72% non-retired and 28% retirees. Of total respondents, 52% had reported annual income of less than $90,000 and 40% 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 median age of the non-retired investor is 48 and the retiree is 70.

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) is one of the largest wealth managers in the U.S., with $1.6 trillion in assets. WBR includes Wells Fargo Private Bank, serving high-net-worth individuals and families; Wells Fargo Advisors, the third-largest brokerage firm in the U.S.; Wells Fargo Retirement, which manages $298 billion in employer-sponsored retirement plan assets for 3.7 million Americans; and Abbot Downing, serving ultra-high-net-worth individuals and families. 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 & Company (Twitter @WellsFargo)

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.5 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 locations, 12,000 ATMs, and the internet (, and has offices in 36 countries to support customers who conduct business in the global economy. With more than 264,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2013 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at

About Gallup

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.

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