Investor and retirement optimism surged in the first quarter, driven almost entirely by happier, more hopeful retirees, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index released Wednesday.

The index rose to +37 in February, up 12 points from +25 in November of 2013. Among retired investors, the index shot up 35 points to +41 from +6 three months earlier. In contrast, optimism among non-retired investors held steady at +35, a mere three-point gain from +32.

“It is both interesting and encouraging to see that retirees are more optimistic,” Joe Ready, director of Wells Fargo Institutional Retirement and Trust, said in a statement. “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.”

Retirees were notably more optimistic about their outlook for retirement, with 40% saying that they were “a little” or “a lot more” confident about the future than they had been. Among the non-retired, only 35% said the same.

Despite the generally upbeat outlook, investors were still skittish, with 62% saying that their fears about sustaining significant losses in a repeat of the 2008/2009 stock market downturn had not eased.  Just one-third (30%) said that last year’s market gains have made them less fearful of a significant market decline, 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,” Ready said.

In fact, more than half of investors (58%) are bracing for a stock market correction this year that will take back significant gains. In the event of a correction, most (70%) would hold onto to their investments, while 20% would use the correction as a buying opportunity to invest more in the market. Less than 10% said they would exit the market, according to the survey. 

The most recent Wells Fargo/Gallup Investor and Retirement Index surveyed  1,011 U.S. investors from Feb. 6 – 16, 2014. 

Read more:

Register or login for access to this item and much more

All Bank Investment Consultant content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access