American investors ended 2019 more confident about their finances and less afraid of a market crash and recession than they were in 2018, yet their plans to make market investments continue to decrease as fears of their rising costs of living continue to loom, according to a study by Allianz Life.
The cost of living worries might drive renewed interest in products with guaranteed retirement income to help mitigate market volatility risk, according to Allianz.
The Allianz Quarterly Market Perceptions Study from Allianz Life Insurance Company of North America found that American investors who are worried a recession “is right around the corner” is down 7% from Q3 (to 43%, down from 50%). It was 48% in Q2, 46% in Q1, and 44% in 2018. Respondents who worry a big market crash is eminent is down to 39% from 48% in Q3, 47% in Q2, 46% in Q1, and 42% in 2018. Yet almost half (49%) of Americans say rising cost of living is a big risk to their security in retirement, and 34% said it might keep them from retiring. The pool of respondents to the online survey also increased from a nationally representative sample of 803 people 18 and older in April of 2018 to 1,005 respondents in November 2019.
“Interestingly, despite this current sense of calm, the number of people who say now is a good time to invest in the market continues to decrease,” said Kelly LaVigne, vice president of consumer insights at Allianz Life. “This may be because people are anticipating more volatility in 2020, and don’t want to take the risks that those major swings can have on their savings and retirement.”
The youngest surveyed, millennials, are the most concerned about the impact of rising costs (62%), both now and in their future, compared with 56% of Gen Xers, and 42% of baby boomers. They are more likely to say the rising cost of living is preventing them from saving money for retirement as much as they should.
Of the respondents, 31%, (an increase of 5% from Q3), say putting some money into a financial product that provides a guaranteed stream of income in retirement is the most important step to ensure they have a secure retirement.