Does this mean it’s time to sell?
The Wells Fargo/Gallup measure of investor and retirement optimism held steady in the fourth quarter at 140, and is closing in on its September 2000 high of 147.
Three-quarters of non-retired investors in the survey have a 401k plan, and more than half say the most valued feature of their plan is the “match contribution from their employer.”
The next most valued feature is the tax deferral on the money they contribute, which was noted by 33 percent.
Forty-six percent say they would “save less” or “stop saving” in their 401k if the tax-deferred status of their plan was taken away, whereas 42 percent say they would “save the same amount.”
“The 401k plan has evolved into the greatest savings and investment vehicle that Americans have today to steadily build a retirement nest egg,” Fredrik Axsater, executive vice president and head of Strategic Business Segments at Wells Fargo Asset Management, said in a statement. “Pre-tax savings have a direct impact on the level of savings that people achieve, and we have to recognize this as the country contemplates changes in tax policy. The employer-sponsored 401(k) is critical to allowing working people to save and invest over time.”
Investors are generally optimistic about all seven aspects of the index, with especially strong optimism about economic growth, stock market performance and employment. Retired investors are more optimistic than non-retired.
According to the poll, 72 percent of investors are “somewhat” or “very optimistic” that they will be able to achieve their investment goals over the next five years, up from 52 percent of investors during the same quarter five years ago. Investor optimism generally tracks with market gains, as the S&P has gained nearly 100 percent since the fourth quarter of 2012.
Nearly all non-retired investors “strongly agree” or “somewhat agree” that “it is important to have a guaranteed income stream in retirement, in addition to Social Security,” and yet there is confusion about how to get this additional income stream.
Six in 10 either “strongly agree” or “somewhat agree” that they want a guaranteed monthly income stream that lasts as long as they need it, even if that means giving up access to some of their money.
But at the same time, 75 percent of non-retired investors either “strongly agree” or “somewhat agree” that they want the freedom to spend their money as they want in retirement, even if that means they may run out of money too soon.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
