Capitalizing on market crashes is key to retiring on time. Many millennials are still looking for their first chance.

• Stock market declines can create bargain-buying opportunities for investors looking to generate long-term wealth.
• Many millennials are looking for their first chance to participate, having lacked adequate savings during prior market downturns.
• Experts say millennials shouldn't necessarily wait for a crash to start investing.

When the stock market falls, people with investment portfolios or a 401(k) generally see their wealth suffer. But, perhaps counterintuitively, those same patches of weakness present millennials the opportunity to keep their retirement savings on schedule — as long as they're proactive and ready to put money to work.

That's because a falling stock market creates discounts and a chance to buy high-upside assets on the dip. It's a crucial retirement-building practice that many millennials haven't been able to participate in, either because they haven't experienced enough market cycles, or because they didn't have enough money saved during previous downturns.

Despite this late start, expert financial advisers say millennials should continue to stay alert for further market slides, especially given recently cloudy outlooks from Wall Street strategists. And with stocks down 12% since the start of February, and off 17% from all-time highs reached in early 2022, it might already be time to start bargain-hunting.

"In our adult lifetimes, we'll likely only see three to five major economic downturns, and they will be our biggest opportunities to build wealth," Vivian Tu, a former JPMorgan equity trader who now creates financial literacy content for her over two million TikTok followers, told Insider. "It's critical for us to invest now if we can."

The 28-year-old is among the TikTok financial influencers telling their young audiences not to miss out on the next stock market slump.

After all, a lack of available capital kept many millennials on the sideline in 2008 after the S&P 500 fell nearly 50% during the Great Recession. Missing that entry point kept them from capitalizing on strong, low-rate-fueled gains over the following decade. The same thing happened during the COVID crash of 2020, when the index fell more than 30% in a matter of weeks, only to rally to a record high by the end of the year. Any millennial who didn't get in at those depressed levels missed a record-setting 27% return in 2021.

For millennials, over half of whom could enter retirement without sufficient savings, failing to capitalize on the next market downturns could prove especially costly.

It's not just a young person's problem. At least 60% of Boomers could enter retirement without sufficient savings, Boston University economist Laurence Kotlikoff previously told Insider, based on his research of the generation's retirement challenges. And he said there's "every reason to think the situation will get worse'" for younger generations. Roughly half of all retirement age Americans had no personal retirement savings as of 2017, according to a January Census Bureau report published last year. 

Millennials may need 2 to 3 more "market downturns" to retire on schedule

While the magic number for retirement savings varies person-to-person, some have put the cost of a comfortable retirement anywhere between $1 million and $3 million. Many millennials have taken steps to try and reach these milestones. Per a Gallup survey last year, 62% of Americans aged 30 to 49 — which partially reflects the millennial generation — had money invested in the stock market, whether it be through a stock, mutual fund, or 401(k).

But if the typical 35-year-old millennial "wants to retire in 25 to 30 years," they may need two to three more "market downturns," Marshall Nelson, a wealth advisor at Crewe Advisors, a Utah-based wealth management firm, told Insider. Nelson defines a "downturn" as the market falling by 20% to 30%, something he says has historically happened every seven to eight years on average. 

During the Great Recession, many millennial investors were too young — or didn't have sufficient income — to capitalize on the market downturn. And Nelson says that while the COVID recession in 2020 provided millennials their "first chance to buy a big dip," the window to capitalize on this was short before stocks surged. 

During these periods, Tu says, "rich people" have taken the opportunity to "buy stocks, real estate, and entire companies at bargain bin prices, and when things inevitably recover, they will ride that wave back up." 

But many Americans, she says, have gotten spooked by market declines and missed out on future gains as a result. 

"There's no other instance where people run away from a sale except in the market," she said.

Millennials shouldn't wait for a stock market crash to start investing

Some investors have argued certain investments are already trading at an attractive discount. The S&P 500, for instance, fell 20% last year — its worst performance since 2008 — and is still down roughly 15% from its 2021 peak.

While some experts think stocks could fall considerably this year, perhaps even resulting in a huge stock market crash, others are betting on a S&P 500 rally. Just how fast inflation comes down — and the Federal Reserve raises interest rates in response — are among the key developments investors are monitoring. 

While buying cheap stocks during a market downturn can lead to investment gains down the road, neither Tu nor Nelson say millennials should wait to jump into the market until they think it's "bottomed-out." Instead, they recommend "dollar cost averaging," investing a set sum of money on a consistent basis whether the market is up or down. 

"If you're dollar cost averaging and staying consistent, you'll naturally buy more shares of whatever investment you've selected when things are down — lower prices," said Tu. "And you'll naturally buy fewer shares of whatever investment you've selected when things are up — higher prices."

"There is no perfect way to invest during a dip simply because you can't know when the market has bottomed-out," Nelson said. "However, making steady contributions during a downturn will prove to be beneficial when the market eventually makes its recovery."

To be sure, not everyone has the extra money set aside to buy cheap investments, particularly as inflation erodes many Americans' savings. 

Additionally, while the S&P 500 — a diversified index of 500 large US corporations — has historically overcome slumps and risen in the long-run, many individual companies have proved to be poor long-term investments. The S&P 500's long-run rise isn't a guarantee either. Some have argued that overvalued markets, slowing population growth, and rising interest rates could weigh down US stock market returns for at least the next decade.

Lastly, while the economy isn't the same thing as the stock market, plunging stocks often coincide with real people being negatively impacted by layoffs and dwindling savings. So whether or not millennials should be "hoping" for a market downturn isn't a straightforward question. 

For older generations closer to retirement who don't have the same long-term investment horizon as young investors, a down stock market is more clearly in the bad news bucket.