What America's Doing Right and Wrong

New survey results from the Investment Company Institute and the Securities Industry and Financial Markets Association provide a fresh glimpse into Americans' financial lives -- and the results aren't all pretty.

Which half are you in?
47% of Americans now own stocks and/or bonds. That may sound good, and it is up from 39% nearly 20 years ago, in 1989. But it's down from 57% in 2001. In absolute terms, it's worrisome that only half of Americans hold these investments, because stocks in particular hold the greatest long-term promise for most of us. According to various researchers, stocks have solidly outperformed bonds and many other investment alternatives over the long run.

The recent downward trend is also troubling, because it suggests that people are leaving the market when it falls -- as in 2001 and today -- and jumping aboard when it rises. That's backward thinking. You'll find the most stocks on sale when the market drops sharply, which usually makes low points a good time to buy. (My colleagues have called our current doldrums "The Best Investing Opportunity in 35 Years.")

Retiring accounts
Worse yet, people haven't been flocking to stocks and bonds because they're excited and engaged about investing. Many, if not most, of them are now invested simply via the 401(k) and other retirement plans offered at their workplaces.

With traditional pensions now going the way of the sabretoothed tiger, most of us have only IRAs and 401(k)s left for retirement savings -- and many of us aren't even taking advantage of them! According to Hewitt Associates, roughly a quarter of American workers are not participating in their available plans, and some 4% of participants recently stopped adding money to them. Bad move!

The good news here is that some three-quarters of Americans are using their 401(k)s. But even then, many of them may not be investing that retirement money effectively, since only 47% are in stocks and bonds. If you're saving for retirement by adding long-term money to a money market fund, you'll be lucky to just beat inflation. The $30,000 you invest today might indeed grow over 30 years, but it will end up still being only enough to buy you a nice new car.

Most of us don't have traditional pension plans to live off in our golden years, and who knows what Social Security will look like in 20 years? Health-care costs have been skyrocketing, crushing many retirees. For these reasons, we need to actively build comfortable retirements for ourselves. (If you'd like to set yourself up for a painless retirement, try our Rule Your Retirement newsletter service free for 30 days.)

Where are you?
So how are you doing? Are you invested in the stock market, or in any other investments likely to grow fast enough to provide for you in the future? Are you making the most of your 401(k) plan, by at least grabbing all of the matching funds your employer offers? Are you contributing to an IRA each year? If so, good for you!

If not, it's not too late to make a few changes and start taking action. Even if you have just a decade left until retirement, you can still make a big difference. A $100,000 nest egg that grows in stocks at an annual average of 8% over the coming decade, instead of at 3% in money market funds or CDs, will ultimately give you around $216,000, instead of $134,000. That's a big $82,000 difference.

You may well beat the overall stock market, too, via individual stocks. Look how some well-known names have grown in the past decade, even as the stock market has gained very little ground:

Source: Capital IQ, a division of Standard and Poor's.

So hop to it, Fool -- make sure you're in the responsible segment of American society.