In the past ten years I've been able to sock away nearly nothing in retirement due to the amount of time I've spent unemployed, and I'm currently 30. While I'm as affected by the market issues as anybody else, one side effect of stock prices dropping back to 1997 levels is that all the interest I thought I was missing out on, it turns out I wasn't after all.
Man, I wish I were twenty and had a good job now, buying my IRAs at the bottom of the market like this.
Russell 3000 Index: http://www.google.com/finance?q=IWV http://en.wikipedia.org/wiki/Russell_Indexes
These are highly correlated over the short run, but technically different investments. So, you can get cute with the taxman by writing off a loss on one and buying into the other every down year.
Caveat -- Crises like the current one can wipe out even the best of portfolios.
If you look at government bonds (a.k.a. TBills), they'll tell you exactly how much interest a truly risk free investment is worth (in yearly interest). Anything higher then that is risky, by definition.
On top of that, you have to factor in inflation.
In other words, it's good to save money, but managing saved money is hard. Be ready for that.
That used to be true, but it isn't strictly true any more. The Credit Default Swaps for US Treasuries are priced to imply that you need to subtract around 1/10 of a percent (100 basis points) from the yield to get the real risk free rate. See http://www.fxstreet.com/fundamental/analysis-reports/sunrise...
https://personal.vanguard.com/us/funds/snapshot?FundId=0040&...
If you want go that route, invest in MSFT, which has averaged something like 50% over the past 22 years.