The big bull market in stocks over the past four-and-a-half years has rescued many people's retirement savings from the brink of ruin. Yet among younger people, the extreme market volatility since the turn of the millennium has made many reluctant to start investing at all, let alone take full advantage of the opportunities they have for tax-favored growth.

Fidelity recently released its latest quarterly report on the state of the 401(k) plans it manages. Across its client base, the average balance in 401(k) accounts rose to $80,600, up 11% from year-ago levels. When you take out those who've switched jobs or recently started saving and look solely at those who've stayed in their existing job for the past 10 years, the average goes up to $211,800, a gain of 19%.

Obviously, those gains reflect the big rise in the financial markets over the past year. But Fidelity identified a troubling trend, noting that "many younger workers -- especially Millennials -- aren't saving at the recommended 10% to 15% of their income." That finding confirms what others have already seen among those who have come of age since 2000: that an emphasis on dealing with outstanding debt has taken Millennials' attention away from long-term investments.

Part of the bigger picture
Retirement saving is important, but it's far from the only financial priority that you have to address. Shorter-term needs like saving up to buy a home or car or for your children's college education also take away potential financial resources from retirement savings.

Yet many Millennials have made getting their debt under control their top priority. As the Pew Research Center found in a report earlier this year, extensive student loan debt has forced Millennials to make tough financial choices, and they've increasingly put off making major purchases in favor of reducing debt levels. The Pew study found that fewer Millennials had bought homes and cars than their older peers, and credit card use and outstanding balances were well below the levels that previous generations had seen.

Another reason why Millennials don't save as much toward retirement as they should is that they don't always know their investing options. In support of its own retirement-investing business, Prudential (NYSE:PRU) did a study showing that the majority of Millennials think their workplace retirement plan is too complicated, with almost half characterizing it as "very risky." Yet more than 75% of Millennials said that they're highly motivated to save for retirement, making it their second-highest priority after getting student debt paid down.

The big business of retirement plans
Clearly, Fidelity, Prudential, and other companies have a vested interest in retirement-savings activity. For years, financial companies have fought to gain market share in the private retirement plan market, and banking giants Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and JPMorgan Chase (NYSE:JPM) have boosted their staffing to try to target retirement plan management opportunities.

We've also seen similar activity in the public pension arena. Just earlier this month, Sen. Orrin Hatch pushed for public-pension reform that would open the door to Prudential, MetLife (NYSE:MET), and other insurance companies to offer annuities to pension-plan participants. Some have criticized the proposal as being a boondoggle for insurance companies, but it also highlights the tension between insurers and the asset-management specialists that currently control a large chunk of pension assets.

Why Millennials need to bite the bullet and save
Millennials who don't want to support big banks and insurance companies in the wake of financial crisis-era bailouts might not like how financial companies use 401(k) plans as a revenue source. Yet given the benefits of 401(k)s as part of an overall retirement strategy, avoiding them on principle simply costs too much down the road.

Fidelity and its peers face an uphill battle in educating Millennials about the need to save for retirement. With signs that Millennials are at least addressing their debt situation well, however, giving up on the generation's retirement prospects is at this point premature.