U.S. investor optimism rose to an index rating of 31 in March, up from -8 recorded in November 2012, in the latest quarterlyWells Fargo/Gallup Investor and Retirement Optimism Index.

The overall rise in optimism was due to a surge among working Americans, whose sentiment rose from -8 in November 2012 to 38 this spring, index representatives said. Retired Americans weren't nearly as optimistic at 7, which was up from -5 recorded last November. The 30-plus point difference in optimism between retired and nonretired comes after six quarters of closely aligned sentiment between the two groups of investors. The median age of the nonretired investors participating in the survey was 46, and the median age of the retirees was 70.

Half of investors said now is a "good time" to invest in the financial markets, up from 39 percent from the prior quarter and at the same level as in February 2012. Fifty-four percent of the working Americans surveyed said this is a "good time" to invest while less than half (43 percent) of retired investors hold this same view. The survey was conducted between March 14 and 24, 2013 by telephone interviews.

Despite the strong performance of the stock market in the first quarter 2013, 85 percent of investors said they "made no changes" to their investments in the stock market. Ten percent of investors increased their stock market investments during the first quarter 2013 (6 percent of retired and 12 percent of nonretired investors). In the first quarter 2013, the S&P 500 rose 143 points, or 10 percent, from the fourth quarter 2012.

"The emerging optimism is encouraging, but the disparity in optimism between the nonretired and retired is notable," says Laurie Nordquist, director ofWells FargoInstitutional Retirement and Trust. "The lack of action on the part of investors during the first quarter rally shows that people stayed the course and didn't have a knee-jerk reaction that caused them to change their investment allocations."

Half of retired investors said the low interest rates have done "a great deal" or "quite a lot of harm" to savers and investors, while only 25 percent of nonretired investors shared that sentiment. Asked whether the benefits of low interest rates have "outweighed the costs," 69 percent of nonretired investors agreed, compared with 51 percent of retired investors. Thirty-five percent of retired investors and 28 percent of working investors said that low interest rates have caused them to "put money in investments that they might have avoided."

"In general, investors think low interest rates have had a positive effect but at the same time, they seem to be more of a burden to retired Americans today who are living on a fixed income," Nordquist says, adding, "Low interest rates seem to become more challenging when we ask nonretired investors to think about their effect on theirfutureretirement."

Nearly half of all investors who participated in the survey (47 percent) said today's low interest rates will make them live "less comfortably" in retirement. Forty-five percent of retired investor and 48 percent of working investors agreed with that predict. Forty-three percent of all investors—35 percent of retired and 46 percent of nonretired—said they fear low rates will mean they will "outlive their money" in retirement. One in three working investors said low interest rates will cause them to "delay" retirement.

However, three in four responding investors said they see low interest rates having a positive impact on housing. In the past two years, a third have taken advantage of the rates and refinanced their home, including 39 percent of working investors and 14 percent of retired investors. For those investors who refinanced, 43 percent said they did so to reduce the number of years of their mortgage and 32 percent said they saved the money.

Taxes in retirement

Sixty-eight percent of investors—59 percent of retired and 71 of the nonretired—said they're worried that they will have to pay higher federal taxes in retirement and will have a more difficult time living "comfortably" in retirement. As a result, 39 percent said their worry over higher taxes has made them "more likely to seek after-tax investments," but 58 percent said they haven't.

"Traditionally, retirement has been a time when you might hope for lower taxes, but this is not the case right now. I hope that people will think about taxes more proactively in the context of overall retirement planning," Nordquist says.

Half of all investors participating in the survey said they supported the suspension of the payroll tax holiday to provide more funds to Social Security. About one in three (35 percent) said the suspension of the payroll tax hike has forced them to reduce their overall spending, and a similar percentage (32 percent) said it has forced them to reduce the amount they are saving for retirement.

In terms of public policy, 59 percent of investors in the survey said they'd like to see political confrontations in the nation's capital come to end as opposed to potentially "getting their way" on future government spending, tax policy, and federal budget deficits.

Sixty-two percent of investors said recent political confrontations have had a "major negative" impact on the overall economy, 55 percent said the confrontations have had a "major negative" impact on business confidence, and 53 percent said they've had a "major negative" impact on consumer confidence. Most respondents (88 percent) said a politically divided federal government hurts the investment climate, with 70 percent saying it hurts "a lot."

American investors are optimistic about life in retirement, with 61 percent of working investors saying they have "no worries" about being "unhappy" in retirement. Sixty-nine percent of retired investors expressed the same lack of worry.

Twenty-nine percent of working investors said they have a written plan for retirement, down from 34 percent last quarter. More than half of investors said their retirement calculations are "a guess."

Roughly two in three responding investors—56 percent of retired and 70 percent of nonretired—said they feel "little or no control" in their ability to build and maintain their retirement savings in the current environment.

More than half (65 percent) of investors said they have a 401(k) plan, including 44 percent retired and 72 percent of working investors. Among those with a 401(k) plan, 30 percent said the new fee information was something they "paid attention to," while 70 percent said they have paid "little" to "no attention" to the new information about fees that has been published in the last year. Sixty-two percent said the new fee information has had "no impact" on the way they manage their 401(k).

Fifty-six percent of investors said the rising stock market has had a "major" to a "minor" positive impact on their confidence in the economy, while one-fifth of investors said it's had "no impact" on their perception of the economy.

Similarly, 55 percent of investors said the rising market has had a "major" to a "minor" positive impact on their ability to retire.

The survey was conducted March 14-24 by telephone. The sampling for the index included 1,035 investors randomly selected from across the country.

For this study, the American investor is 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. About two in five American households have at least $10,000 in savings and investments. The sample size included 74 percent working investors and 26 percent retirees. Of total respondents, 64 percent had reported annual income of less than $90,000. The Wells-Fargo Gallup Investor and Retirement Index is an enhanced version of Gallup's Index of Investor Optimism that provides its historical data.

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.