Nearly 4 in 5 Millennials May Not Have Enough Money to Retire Comfortably

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It's probably no secret by now that America has a retirement problem.

The United States' personal household savings rate as of June 2016 was just 5.3%, which is substantially lower than most developed countries whose citizens are socking away more of their income for retirement. This statistic can be coupled with data that GOBankingRates released earlier this year, which found that 56% of Americans had $10,000 or less saved for retirement. A full one in three didn't have a red cent saved for their golden years.

Without having a proactive saving and investing plan in place, Americans run the risk of not having enough income during retirement to pay their bills. But no generation could be in more perilous shape than millennials.

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Millennials are in big trouble

Earlier this year, Stash, an investment app-based company that helps millennials with their investment choices, commissioned a study to learn a bit more about what millennials are doing for retirement. Harris, which conducted the study by interviewing 489 millennials between the ages of 18 and 34 in March, found one striking similarity among millennials: Nearly four in five (79%) millennials weren't currently invested in the stock market.

When questioned why they haven't invested in stocks, 40% of millennials believed they didn't have enough money, 34% responded that they didn't know how, and 13% noted that student debt prevented them from investing in stocks.

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Here are a handful of additional critical findings from the study:

• 76% of millennial women and 60% of millennial men find investing confusing.
• 60% of millennial women and about half of millennial men can't relate to the typical investor, whom they view as an older individual.
• 67% of millennials believe that if they are going to invest in the stock market, it's important that they make the decision of what to invest in, rather than relying on robo-advisors.
• 37% of millennials would choose an investment app over a traditional investment firm with their money.

The biggest concern with the above data is pretty simple: The stock market is going to outperform nearly all asset classes over the long term. In other words, millennials could be missing out on substantive long-term gains, which could ultimately leave them coming up short when it's time to retire.

Historically, the stock market averages a gain of about 7% annually, including dividend reinvestment, over the long term. Sure, the stock market will have its hiccups from time to time, but sticking with stocks for long periods of time generally results in inflation-topping gains.

Making matters worse, millennials aren't homeowners, either. According to SmartAsset, 43% of adults ages 35 and under owned a home in 2005. As of 2016, this rate had dropped off to just 35%. Mind you, I'm not equating a home as a viable investment vehicle for your retirement. In fact, rising home values have outperformed inflation by a relatively minuscule amount historically -- 0.21% between 1890 and 1990, based on data from Robert Shiller's Irrational Exuberance. However, owning a home at least builds or maintains equity typically on par with inflation, which is something that nearly two in three millennials don't have right now.

If millennials are going to get on track for retirement, certain things need to change.

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How millennials can take charge of their financial future

The first thing that has to change for millennials is that they need to be investing at least some of their money in the stock market. According to data from Yardeni Research, there have been 35 stock market corrections of at least 10%, rounded to the nearest integer, since 1950. In each of those instances, the stock market erased the correction losses within a matter of weeks, months, or in rarer cases, years. If you're buying stocks with regularity, regardless of where the stock market is valued, you'll more than likely be averaged in at a favorable cost basis over the long term. Plain and simple, the stock market gives millennials an opportunity to outpace inflation over the long term, leading to real wealth creation.

Secondly, millennials need to understand that there is no amount too small to get started. Within the survey, 70% of millennials believed at least $100 was needed to begin investing in stocks, while 38% believed $1,000 was necessary. Depending on which brokerage service you use, far less may be needed.

For example, Capital OneInvesting, which was formerly known as ShareBuilder, allows users to open accounts with no minimum deposit. The real advantage is that Capital One Investing allows users to purchase fractional shares with a low fixed-cost commission. Additionally, recurrent deposits into the account can be set up on a weekly, bi-weekly, or monthly basis. Shares are often purchased on a specified date, which can help remove emotions from the table and help keep you accountable for saving enough money to meet your next automatic withdrawal.

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Millennials, at least based on the above study, appeareager to remain independent, yet they still need to learn the basics of investing in the stock market. The easiest way to do this is to be proactive and seek out information on their own. Some of this can be done through app-based learning tools, while we at The Motley Fool also have our own guide to help the new investor get started. There's no excuse to remain on the sidelines when so many investment teaching tools are at your disposal.

Finally, millennials should consider finding other millennials with like-minded goals and sharing their investment knowledge and ideas. The study suggests that millennials see the typical investor as out-of-date with their ideals and values. Therefore, forming an investment group with your friends or similar-aged colleagues could give you and the group a venue to bounce investment ideas off of. This would be an opportunity for millennials to remain in complete control of their investments, but it'd also give them access to differing perspectives from their own generation.

If there's one factor working in favor of millennials, it's time. There are still three to five decades left before millennials will begin to retire. But wait too long, and the window of investing opportunity to meet your retirement goal could close. Be proactive and get on the right track today.

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Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.

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