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The roadmap to retirement is paved with countless unexpected twists and turns. From going to college to buying a house and starting a family, curveballs are thrown at us from time to time that require us to adjust how we save for retirement and invest for our future. Of course, deciding what to invest in is a challenge in and of itself.

Fear and loathing dominate the investing landscape
The Great Recession between 2007 and 2009 didn't do investors any favors. The more than 50% tumble in the U.S. stock market terrified investors, especially baby boomers, and sent them scurrying to the sidelines. Although the U.S. stock market has long since rebounded, some investors who were simply too afraid to hang on missed the rally.

The same holds true for today's millennials, who generally distrust Wall Street and the stock market. Despite having time and compounding potential on their side -- millennials won't be retiring for another 30 to 50 years -- and factoring in the 8% historical return of the U.S. stock market, fewer than 20% of millennials in a recent Goldman Sachs survey believed that investing in the stock market was unequivocally the best way to save for the future. Nearly 40% of respondents said "No" it wasn't, with close to a quarter claiming to not know enough about the stock market to invest in it. Another roughly 45% of respondents believe the stock market can help them reach their retirement goals, but preferred low-risk or small investments only.

This aversion to the stock market has led to a discernable move toward so-called safe-haven investments. Bank CDs, money market accounts, and even savings accounts are viewed favorably by consumers as ways to preserve capital and earn nominal profits.

Image source: Flickr user Dave Hosford.

Americans have an "interest"-ing problem
But there's one major problem with this idea: consumers may not realize it, but they're actually losing money. On a nominal basis, consumers are earning some level of interest on the money they have in CDs, money market accounts, or savings accounts. However, if this interest level is lower than the current rate of inflation (i.e., the rising price you and I pay for goods and services), then the consumer is actually losing their buying power, and thus losing "real money."

Now think about this for a moment: According to a 2012 report from Pitney Bowes, as of 2011 the average American had $5,923 in their savings account. The Federal Reserve has kept lending rates at historically low levels for the better part of six years., courtesy of the Federal Deposit Insurance Corporation, noted in October that the national average savings account interest rate is a paltry 0.06% for all balances.

To be clear, these are two separate figures: one from 2011 (the Pitney Bowes study on average savings account balances), and one from 2015. It's quite possible that the average savings account balance has shifted since Pitney Bowes released its report, but it's unlikely that the average interest rate paid in savings accounts had budged much, if at all, in the past six years. Utilizing the $5,923 average from 2011 and the current 0.06% annual interest rate would mean the average American is earning just $3.55 in interest each year. That's not even enough to buy a latte in some coffee shops, and it highlights exactly what sort of hole millennials and boomers could be digging themselves into.

Image source: Flickr user Sebastiaan ter Burg.

Save for retirement the right way
The caveat here is that rising interest rates could offer a little bit of a reprieve for Americans with a substantial amount of money in their savings accounts. The Federal Reserve has hinted at raising its federal funds target rate during its December meeting, but at most we're likely looking at a 25 basis point move. The Federal Reserve's longer-term target for lending rates of around 2% means it could take between 35 and 40 years for the average American's money to double in their savings account. Yuck!

A savings account is great for emergencies, but it's not a practical tool that'll help you reach your retirement goal. In order to do that you're going to need to trust Wall Street over the long haul and change up your investment strategy.

In order to save for retirement the right way, you'll need to turn back to the stock market. This doesn't mean you need to go out and buy a portfolio of high-risk biotech and tech stocks. On the contrary, you have multiple investment options at your disposal that could lower your long-term investment risk but still give you ample growth potential.

One idea is to stick to electronic-traded funds, or ETFs. ETFs are basket funds that own anywhere from a handful of stocks to potentially hundreds of stocks. They provide unparalleled diversity in many instances, and they can reduce the volatility associated with investing in individual companies. The downside? You'll often pay a management fee (known as an expense ratio) when purchasing an ETF -- but the fee is negligible (well below 1% in most instances) if you're investing for the long-term.

Another option is to focus your efforts on blue-chip stocks. These are brand-name companies that tend to be somewhat immune to recessions, and they typically pay handsome dividends that can be reinvested to really supercharge your gains. Examples would be Coca-Cola, Johnson & Johnson, and Waste Management. All three boast above average dividends and lower-than-average volatility relative to the S&P 500, and provide a good or service whose demand doesn't fluctuate much during a recession.

If you still want some of your investments to be outside the realm of the stock market, that's fine too. However, I'd encourage you to consider looking into corporate bonds. Yields for corporate bonds are well above the current rate of inflation, and if you can snag a bond from a company with a strong foundation (such as a Coca-Cola), then there should be little worry about the interest you'll be paid until the bond's maturity.

Using a savings account to fuel your retirement clearly isn't working. Don't wait till it's too late before you come to this realization -- make changes to better your retirement outlook today.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Waste Management and has the following options: long January 2016 $37 calls on Coca-Cola, short January 2016 $43 calls on Coca-Cola, and short January 2016 $37 puts on Coca-Cola. It also recommends Coca-Cola and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.