Overall investor optimism plunged in September, nearing lows reported during the financial crisis of 2008, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index. The overall Index fell to -45, down from +33 in May. In December 2008, the index fell to -49, and subsequently fell to its lowest point of -64 in February 2009.

Nearly two-thirds of investors (65%) say they “have little” or “no control at all” over their effort to build and maintain retirement savings today due to the environment. Separately, for the 44% who cite a decrease in control over building their savings, the top three reasons cited as major factors are “unemployment and a weak economy” at 85%, extreme market volatility at 80%, and the confrontational nature of politics in Washington at 74%. Forty-eight percent say their control has “stayed the same.”

“A majority of Americans feel they don’t have control over their effort to build retirement savings, and this is just as worrisome as the sharp drop in investor optimism,” said David Carroll, senior executive vice president and head of Wells Fargo Wealth, Brokerage and Retirement. “The reasons investors cite are all quite understandable given our environment today; yet, this lack of control coupled with overall feelings of fear could cause investors to make choices that will deter investing for the long-term.”

Overall, 63% of respondents responded “no” when asked whether now is a “good time to invest in the markets,” up from 43% in May. Even so, 42% of investors are still very engaged in the market saying they follow it “daily,” while about a quarter (24%) say they monitor it weekly. When asked what they think the best place is to keep their money right now, 26% said stocks/mutual funds, 21% said savings accounts/CDs, 20% cited gold/precious metals, and 14% said under the mattress/cash.

The September poll shows optimism among U.S. retirees fell to -60, down from +61 in May. Non-retired optimism fell from 24 in May to –41 in September. The average age of retirees surveyed is 68 and that of non-retirees is 45.

Investors said the top three factors affecting the investing climate “a lot” are the current rate of unemployment at 83% (up from 67 % in May), the deficit at 79% (up from 75% in May) and the job growth rate at 75% (up from 54 % in May). Respondents cited “politically divided government” as the next top factor — at 74% — affecting the investment climate, up from 54% in May.

Investors were asked to rate nine situations in society that could impact their “personal economic condition,” and the two highest rated choices were “changes to Social Security and Medicare to reduce the deficit” and “gas prices,” each at 57%.

In the face of a decline in optimism, 40% of the non-retired have “some” confidence they will have enough money to live comfortably in retirement and 39% say they have “a great deal” to “a lot of confidence.” For the retired, 37% say they have “some confidence” while 52% say they have a “great deal” to “a lot of confidence” they have the money to live comfortably in retirement.

Funding Retirement in the U.S.  

Similar to the May results, the September poll found significant differences between how today’s retired Americans are funding their retirements and how those yet to retire expect to do so. Today’s retirees are more likely to depend on employer-sponsored pensions and Social Security, while future retirees expect to rely on their own savings:

Nearly two in three (64%) of the non-retired said their 401(k) will be a major source of retirement funding for them, compared to 33% of the retired.

Thirty-four percent of the non-retired expect pensions to be a major funding source for retirement, compared to 44% of retirees.

Thirty-two percent of the non-retired call stock investments a “major source” for funding their retirement as compared to 26% of the retired.

Of the non-retired, about a third (34%) say they are putting more away for retirement; 52% say they are putting away the same, and 13% say they are putting away less, up from 8% in May.

The number of non-retired Americans who say they have “very little” to “no confidence” in the stock market as a place specifically for retirement funds has risen to 46%, up from 32% in May. Retirees have also lost confidence in the market as a place for retirement investing, with 49% having little to no confidence, up from 40% in May.

Planning for Retirement

While the poll results suggest younger Americans see retirement saving as the individual’s responsibility, few have created written retirement plans. About a quarter (26%) of the non-retired respondents and just over a third (38%) of those retired said they have a “written” plan for retirement. Of the non-retired who do have a written plan, 55% said they have either a “great deal” or “a lot of confidence” they will “have enough money to live comfortably” in retirement, versus 33% of those who do not have a written plan or any plan at all.

Among those with a written financial plan, 74% of non-retired and 86% of retired feel having a financial plan with specific financial goals or targets gives them confidence they can achieve their future goals.

The poll was conducted from September 1-11, 2011. The sampling for the Index included 958 American investors, defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more. The sample size is comprised of 70% non-retired and 30% retirees. The Index had a baseline score of 124 when it was established in October 1996. It peaked at 178 in January 2000, at the height of the dot-com boom, and hit a low of negative 64 in February 2009.