Looking at the returns for most asset categories this year, the story has been modest, but positive performance. While pockets of the market, such as small companies and the technology heavy NASDAQ have struggled in 2014, many investors find their portfolios significantly higher in value than just a few years ago. Not surprisingly, with 401k and retirement accounts the focus of many peoples retirement plans, Americans attitudes toward retirement are improving. The results of a new Gallup Poll show 50% of non-retirees believe they will have enough money to retire comfortably. This is the first time since 2007 that 50% or more people answered yes.
Younger people (age 18-29) are the most confident about their retirement outlook. This is an encouraging trend, though it is concerning that the number of young people owning stocks has dropped significantly from 2008 levels (see bottom chart). Stocks, despite their volatility, remain a key driver of long term portfolio returns for most investors, and especially for those with long investment horizons. Confidence for those already retired continues to improve modestly, with 77% stating they currently have enough money to live comfortably, up 2% from last year. While low bond yields and high multi-year stock returns bring down expectations for future returns, if returns continue to be modest, but positive, more investors should regain confidence to re-enter the market.