After enduring ongoing stock market volatility throughout all of 2018, Americans remain resilient in the face of persistent volatility in the start of 2019, and are cautiously optimistic about the market gaining ground.
These are the findings of the new Allianz Life Quarterly Market Perceptions Study. The 2019 Q1 findings were released today by Allianz Life Insurance Company of North America (Allianz Life). This is the first in an ongoing quarterly survey that will examine Americans perceptions of market activity and their feelings toward investing while simultaneously saving for retirement.
Given the ongoing volatility, Americans seem to have adapted to this new normal with one-third of respondents saying they are comfortable with current market conditions.
Last year was one of the most volatile years on record and after the major stock declines at the end of 2018, Americans are apparently becoming accustomed to volatility, said Kelly LaVigne, vice president of Advanced Markets, Allianz Life. This might be setting a dangerous precedent as they could become desensitized to potential major market swings in the months ahead.
Expecting gains, but fearing whats next
Over half (52%) of Americans reported feeling optimistic that the stock market will grow 5% or more in 2019, yet more than four in 10 say they feel worried that a major recession or big market crash are on the horizon.
This juxtaposition in attitudes may be attributed to the fact that, despite ongoing volatility in the short term, the market is still in the longest bull market run ever. But people are wondering how long the good times will last, said LaVigne. They need to keep focus on the long term, and prepare and protect their retirement when this bull run inevitably ends.
Consumer still want growth potential but need protection
The ongoing exposure to volatility has changed what sort of financial solutions consumers may seek, with fewer saying they are willing to give up some potential gains for a product that protects from market losses (49% in Q1 2019, versus 57% in 2018).
This is despite the fact that an increasing amount of people (41% in Q1 2019, versus 38% in 2018) say if the market dropped causing them to lose a lot of money, there is no way they could rebuild savings in time for retirement.
While people might be feeling more comfortable, that doesnt mean they shouldnt take precautions to safeguard their financial future, said LaVigne. Products that offer protection from market volatility with growth potential are becoming more popular as a way to plan for a guaranteed stream of income in retirement.
Millennials offering a reality check
While Americans overall are feeling hopeful about the market, millennials (who tend to be more optimistic) are proving to be the most cautious about what the future may bring. They are more worried about an impending recession (52% compared with 46% of Gen Xers and 44% of baby boomers), and also feel more nervous about investing in the market right now (43% compared with 35% of Gen Xers and 29% of baby boomers).
The findings offer some good news in that millennials are taking their finances seriously, and are trying to be realistic when they anticipate and prepare for what may be coming down the road, said LaVigne.
In addition, while they express interest in a variety of products, compared to older generations, millennials have a higher interest in a product with modest growth and no potential loss (24% compared with 16% of Gen Xers and 11% of baby boomers).
If market volatility really is the new normal, then its important that people of all ages take the right steps to protect themselves in the short term, approaching, and all through retirement, said LaVigne.
About Allianz Life Insurance Company of North America
Allianz Life Insurance Company of North America, one of the FORTUNE 100 Best Companies to Work For in 2019, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2018, Allianz Life provided $2.8 billion in benefit payments that helped policyholders achieve their financial goals. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with over 142,000 employees in more than 80 countries. Allianz Life is a proud sponsor of Allianz Field in St. Paul, Minnesota, home of Major League Soccers Minnesota United.
Allianz Life conducted an online survey, the 2019 Q1 Allianz Life Quarterly Market Perceptions Study in March 2019 with a nationally representative sample of 1,005 respondents age 18+.
Allianz Life conducted an online survey, the 2018 Market Perceptions Study, in April 2018 with a nationally representative sample of 803 respondents age 18+, who are currently not retired.