As the financial stressors from the pandemic fade, Americans are feeling increasingly optimistic but are still harboring concerns about market volatility.
The Q2 Quarterly Market Perceptions Study from Allianz Life Insurance Company of North America finds that as the immediate financial impacts of COVID-19 recede in the rearview mirror, Americans are feeling better about market conditions than they have in over a year. According to the report, while nearly half of Americans (48%) are worried about a major recession, this number is significantly down from last year when 65% were understandably concerned during the early stages of the pandemic.
Market volatility concerns remain
While one-third say they are worried about the risks that market volatility can have on their retirement portfolio, it’s still the lowest number since 2019. A majority of respondents (63%) are feeling more optimistic about COVID and their finances and are less worried about the pandemic’s impact on their finances compared to this time last year.
Yet even as the stock market hits record highs and COVID-19 case numbers decline, there is still concern with 50% of Americans worrying about another pandemic or a new strain of COVID and its future impact on their portfolios.
“As the economy and stock market continue to improve coming out of the pandemic, people are wisely taking lessons learned and applying them to their go-forward financial strategies,” said Kelly LaVigne, VP of Consumer Insights, Allianz Life.
Cautious optimism
However, the outlook isn’t all positive with nearly three quarters (72%) say they expect the markets to be very volatile in 2021, and over a third (34%) say they are too nervous to invest right now. Those who say they are too nervous cite volatility (56%), fear of a market crash (53%), and lack of knowledge/information (53%) as their top reasons for holding back.
When asked about issues that may have a negative impact on their portfolios over the next six months, 58% say they are worried about rising interest rates, and 57% say they are worried about tax policy. Additionally, 64% say it is important to have some retirement savings in a financial product that provides some protection from market risk.
“One of the most important takeaways from the last year is that nearly two-thirds (64%) say they have made positive changes to their saving and spending habits since the pandemic began,” adds LaVigne.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
