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You've probably heard by now that Americans have a bit of a retirement problem.

According to the Planning and Progress Study conducted recently by Northwestern Mutual, 69% of Americans believe there is a chance they could outlive their savings. About a third of all respondents believed there was a better than 50-50 chance they wouldn't have enough money to last throughout retirement.

Also, a number of Americans are reliant on Social Security to provide at least half of their monthly income, or expect to be reliant on Social Security once they retire. Though Social Security has been around for more than 80 years, it's nearing an inflection point where the program will begin paying out more money than it's brining in via payroll taxes and interest. By 2034, a benefit cut of up to 21% could be necessary to sustain the program for another 75 years, which could be crippling to Americans with little saved for retirement.

Two issues standing in the way of a comfortable retirement

At the heart of Americans' retirement woes are two issues.

Firstly, Americans simply aren't saving enough of their earned income to support themselves during their golden years. According to data from the St. Louis Federal Reserve, the personal savings rate in June 2016 was just 5.3%. This is a vast improvement from the 3.4% personal savings rate a decade prior -- but it's substantially lower than what citizens in other developed countries are socking away with each paycheck.

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The other problem is that Americans aren't making smart choices with the money they have saved. Based on a 2015 Money Pulse survey by Bankrate, slightly more than half (52%) of all Americans weren't invested in the stock market. So where are they putting their money, you wonder? According to a report from the Federal Deposit Insurance Corporation, Americans had nearly $5 trillion stashed in money market accounts as of the end of the first quarter 2015.

Let's put this figure in a bit more context. As of the end of Q1 2015, money market deposits accounted for 46% of all consumer deposits per the FDIC. Since Dec. 2007, the point at which the stock market really began to feel the effect of the decelerating U.S. economy, money market account deposits have increased by $2.3 trillion. Comparatively, regular savings accounts and checking account deposits increased by $1.4 trillion and $1 trillion over the same span.

Here's how Americans are wasting nearly $5 trillion in savings

On one hand, it's understandable that consumers made this move. A wildly fluctuating market scared investors into holding more cash, which sent consumer deposits up. The specific focus on money market accounts relates to their slightly higher rate of return compared to a traditional savings account. When the aforementioned FDIC report came out, money market accounts were yielding, on average, 11 basis points (0.11%) higher than the average savings account.

But unless this money is strictly being used for an emergency fund, Americans are letting nearly $5 trillion in savings go to waste. How? Look no further than the near-record-low nominal yields that consumers are willing to accept instead of investing their savings in the stock market or other asset classes.

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According to Bankrate at the time of its study, money market rates were averaging a "whopping" 0.49%. Comparatively, CD rates were averaging 0.38%. A more recent look at average CD rates shows the one-year around 0.3% and the five-year at 0.8%. Even the best of the best CD rates today probably aren't going to push much past 1%. Of course, looking at my own personal checking and savings accounts with a national bank that shall remain nameless, I'm receiving 0.01% and 0.03%, respectively.

You might think that earning something in a savings account, CD, or money market account is better than nothing, but it's probably doing more harm than good. The reason is that the current inflation rate is higher than the nominal return rate of consumer deposits. This means consumers are losing real money and purchasing power despite their nominal gains. If this pattern persists and consumers remain too afraid to diversify their assets beyond consumer deposit accounts, we could have a growing number of people ill-prepared for retirement.

The data is pretty conclusive: stick with the stock market

Yet what's really mind-boggling is the long-term data is overwhelmingly in favor of consumers staying invested in the stock market, even with its occasional hiccups. Historically, the stock market returns about 7% per year when dividend reinvestment is factored in, which is far and away better than what consumers are going to find with fixed-income assets at the moment.

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Since 1950, the stock market has undergone 35 corrections of 10% or more when rounded to the nearest whole number. However, in every single instance the stock market wound up completely erasing its corrections within a matter of weeks, months, or sometimes years. Though there are no certainties when it comes to investing, 35 for 35 is a pretty convincing figure.

Recent data from J.P. Morgan Asset Management also backs up these claims. J.P. Morgan, using data from Lipper, found that staying fully invested in the stock market between Jan. 3, 1995 and Dec. 31, 2014, a 20-year period, would have netted an average return of 9.9% per year, or 555% overall. Mind you, this 555% return traversed two 50% drops in the S&P 500 (the Great Recession and the dot-com boom). If you missed just a shade over 30 of the best trading days in this roughly 5,000-day period, you lost all 555% of your gain.

Here's what's interesting about this data. Some investors would claim that by being out of the market you'd also be missing out on its worst trading days. However, the data shows that six of the 10 best trading days during this 20-year period came within two weeks of the 10 worst trading days. In other words, trying to time the market is a fruitless venture, and consumers would be best served by investing in high-quality stocks over the long-term.

Unquestionably, Americans need to save more money. But we definitely have to be smarter about what we do with the money we're saving.