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Financial Anxiety Rising, Poll Finds
As Stocks Plunge, 88% of Americans Are Worried About Economy's Direction

By Jennifer Agiesta and Jon Cohen
Washington Post Staff Writers
Monday, October 13, 2008

Americans' confidence in their own financial security has tumbled alongside dizzying declines in stock prices and home values, according to a new Washington Post-ABC News poll. Less than half now believe they will have enough money to last through retirement, and two-thirds fear for their family's economic situation.

More than four in 10 in the poll said they have been hurt by the stock market's steep decline; one in six reported "a great deal" of financial pain. Yet even in the wake of last week's historic sell-off on Wall Street, many Americans who own stocks or stock funds -- about three in 10 -- have not looked at their holdings to assess the damage.

One reason: Almost all investors polled said they are in the market for the long term, and most understand the underlying risks of stocks.

Beyond their own pocketbooks, respondents' concerns about the direction of the nation's economy and the performance of the stock market have deepened. Nearly nine in 10 are worried about the direction of the economy over the next few years and more than three-quarters are worried about the markets' performance. Concerns on both fronts are up since mid-September, when markets began to turn sharply negative.

And in a sign that the tightening credit market has spooked large numbers of people, more than four in 10 are worried about their ability to get a loan.

The downturn has taken the heaviest toll on those closest to retirement age. Among those 50 to 64, more than six in 10 are not confident -- including a third who are "not at all confident" -- that they will be able to retire with enough money to carry them through the rest of their lives. Half of adults in this age group said they have personally taken a hit in the market, and six in 10 are fearful of shakier performance ahead.

Overall, 44 percent of adults are confident they can retire with sufficient funds; that is down sharply from 69 percent three years ago and about even with mid-1996 levels, when the Dow Jones industrial average was around 5,500. The decline in confidence since October 2005 cuts across all income levels.

Concern about retirement is deeply intertwined with more general anxiety about personal finances. Overall, 67 percent said they worry about their family's financial situation, up seven points since mid-September, and eight in 10 of those who are unsure of their retirement savings are also worried about their family's financial situations.

The widespread concern comes primarily from the nearly six in 10 who have hitched their financial portfolios directly to the market. Investors make up 58 percent of all adults, according to the poll, with 22 percent holding direct investments in stocks; the rest bought in through mutual funds or pension plans. Just 2 percent consider themselves active traders.

Among all investors, uneasiness is near universal: More than eight in 10 are worried about the market's performance. More than five in 10 are "very worried."

Even in the best of times, however, most feel investing in the market is a risky venture.

Nearly eight in 10 said they consider it more risky than safe, about matching the level in July 2002 as technology stocks started their steep retreat from boom levels. The proportion who consider stocks to be "safe" investments topped out at 35 percent in January 2001.

In the wake of the market's recent declines, most have left their holdings intact, while about one in eight Americans said they have shifted their investments. Among those who have adjusted, more said they are mainly selling rather than buying up new investments.

The poll was conducted by telephone Friday and Saturday, among a random sample of 517 adults. The results of the poll have a margin of sampling error of plus or minus 4 percentage points.

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