Last year, we asked you, our direct investors, several questions regarding the market, the economy, and your level of confidence.

The survey was distributed to over 250,000 investors in October 2022. For purposes of this retirement confidence report, the analysis of responses was restricted to investors age 50 and older and those who were the sole or shared financial decision-maker for their households. The final sample consisted of 1,926 investors who completed the full survey. While we didn’t know it at the time, the S&P 500® Index had reached its trough following a nine-month bear market. Inflation was between 7%-8%, and the Federal Reserve had made several interest rate increases.

Markets have improved and inflation has eased since then. But a series of prominent bank failures over the past few months have riled markets and caused investors to feel uneasy yet again.

With that in mind, I’d like to share some findings from our survey, along with five lessons those findings can teach us about staying focused on our long-term goals.

How concerned are individual investors about the stock market and inflation?

In late 2022, 79% and 89% of respondents said they were “very concerned” or “somewhat concerned” about the stock market and inflation, respectively.

While it’s normal to feel anxious during times of volatility, I would encourage investors to think about how they can stay focused on their long-term goals. One way to do this is to make a promise to yourself; specifically, vow not to make any changes to your portfolio for a specific period. It could be three months, six months, or even longer, but making that promise helps put time between the emotional present and when we might make a change in the future. It also leverages our behavioral tendency to want to make good on our commitments.

How have the stock market performance in 2022 and rising inflation impacted investors’ retirement confidence?

We were pleased to find to find that 54% of respondents said their retirement confidence levels had not changed. But for investors who weren’t feeling confident amid last year’s volatility – or those who are feeling anxious now – what are some ways to boost confidence?

Research has shown that those who review and decide upon their financial goals, then incorporate those goals into a written financial plan, exhibit less negative stress and are more confident in their financial futures. If you haven’t already done so, I’d encourage you to sit down with your spouse or partner and take the time to develop your goals and create a plan.

If you already have a plan in place, periods of volatility are excellent opportunities to review what’s truly important to you. This can help gauge the progress you’re making toward your goals so you can stay on course.

Have individual investors moved out of stocks and bonds due to current economic conditions?

Respondents’ continued confidence through last year’s volatility led to another positive finding: Just 14% opted to move money out of stocks or bonds and into cash.

While a relatively low percentage, it’s worth noting that those 14% of investors likely reached a point where they said, “I can’t take it anymore!” Financial losses understandably evoke many emotions, but it’s important to remember that timing the market is impossible – especially since many of the market’s worst days have occurred close to the best days.

How has the performance of the stock market and inflation impacted investors’ current and planned household spending behaviors?

We found that 41% of respondents had already reduced their spending as inflation was trending up late last year. What I found interesting was how this decision was made: Only 30% of respondents made decisions collaboratively with their spouse. This is an opportunity for those who employ a solo decision-making process to bring their significant other into the conversation. Research has shown that when financial decisions are made jointly, confidence increases.

What are individual investors’ expectations for the stock market one year from now?

As of last October, 60% of respondents believed the S&P 500 would either be a lot or a little higher in one year, and 26% believed the Index would either be a lot or little lower.¹

While the S&P 500 is a major index that serves as the benchmark for many investments, it should not be viewed as your “personal benchmark.” Rather, your benchmark is your financial plan, as well as your short-, medium-, and longterm goals.

While volatility, inflation, and economic uncertainty may make us uncomfortable in the short term, implementing and sticking to a long-term plan can help turn down the heat of the emotional present so we can stay focused on our future goals. Part of that long-term plan could include a systematic investing plan which allows you to create a solid financial habit and invest smaller amounts over time, which may feel less aggressive than a large one-time investment.

¹ Kansas State University

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