Sometime around March 22, 2032, as the closing bell finally, blessedly, rings, I will have lost about a half a million dollars.

In one day.

And that's if I'm lucky.

A perfect future
I don't have the chance to use it all that often, but I like using the future perfect tense. It describes an action that occurs in the future before another action occurs. Here are some examples:

By the time I'm 70, I will have saved about $10 million in my retirement accounts.

To get to that $10 million, I will have maxed out on my 401(k) and IRA contributions every year.

Over the next 25 to 30 years, I will have endured dozens and dozens of days when the market went down 2% or more, and probably at least five when the market lost more than 5% of its value.

You get the idea.

The ways to get to $10 million
Because I will have saved up so much money (there it is again), and because of the inherent volatility of the market, I'll see a day when I manage to lose about $500,000. Perhaps not on March 22, 2032, but sometime around then. There's a near certainty that over a particular month, or over a couple of months, I'll manage to lose much more than that -- depending, of course, on when and how well I structure my portfolio by that time.

First, let's inspect the math on how I (and you as well, if you so choose) can manage to lose all that money in one day, yet still be content with how things have turned out.

Let's say I'm 30 (oh please, let's just say that) and want to retire at the age of 65, so that I can finally start devoting the other 70% of my waking hours to following the New York Yankees. (Damn you, Cleveland Indians!)

Starting from the age of 30, here are various ways to get to a cool $10 million in your retirement account. The number of years you have to save, what you're starting with now, the amount you earn on your returns, and the amounts you add each year are the variables involved.

Actually, the examples below are conservative on the annual addition of savings side for me. Between my wife's and my maxing out on our 401(k)s and Roth IRAs, we'll be saving far more, and so can you.

Number of Years
to Add Savings

Return Rate
on Investments

Present
Savings

Annual Addition
to Savings

Future
Value

Retirement
Age

35

11%

$0

$29,275

$10,000,000

65

45

11%

$0

$10,135

$10,000,000

75

35

11%

$100,000

$17,982

$10,000,000

65

35

15%

$0

$11,348

$10,000,000

65

27

15%

$0

$38,000

$10,775,613

65

A couple of points
Ten million dollars 45 years from now isn't exactly like having $10,000,000 today. In fact, at a 3% rate of inflation, it's really like having $2.6 million of today's dollars -- which is still nice, but it also reveals that losing half a million dollars in a day is a bit less painful in 2032 than it is today. About one-quarter as painful.

Once you play with these types of calculations long enough, you'll see that the two things that change the end number the most are (1) the number of years for your savings to grow (2) and the annual return rate on your savings. You're in near-total control of how many years you want -- or have -- to save for your retirement. The amount you earn is not under your control, though you can make educated guesses about the ways in which the future will act like the past.

Let's say you're keeping all of your savings in individual stocks. Will choosing the biggest, safest companies keep you protected from a big one-day disaster? Let's take a look at some of the goliaths of our market, and how they fared on the last day the market fell 5%, April 14, 2000.

April 13, 2000, Close*

April 14, 2000, Close*

One-Day Loss

Today

Microsoft (NASDAQ:MSFT)

$33.27

$31.98

6.5%

$30.00

General Electric (NYSE:GE)

$41.99

$40.67

3.1%

$41.53

Wal-Mart (NYSE:WMT)

$55.89

$51.18

8.5%

$45.27

Merck (NYSE:MRK)

$49.08

$47.40

3.5%

$53.21

Pfizer

$33.40

$31.97

4.3%

$25.43

ExxonMobil (NYSE:XOM)

$33.89

$33.36

1.6%

$90.99

Citigroup (NYSE:C)

$35.52

$32.93

7.3%

$47.80

Johnson & Johnson (NYSE:JNJ)

$33.27

$31.98

3.9%

$66.10

Total

   

4.8%

 
*Adjusted for splits and dividends.

Keeping all of your money in a pure selection of domestic stocks at the time of your retirement, while a good way to amass wealth, is also a precarious way to maintain that wealth. You can expand that list all the way up to 500 stocks (as the S&P 500 does), and it won't much change how your stock portfolio will do on the worst of days.

A change in speed
So looking at that big, dark single day in the future helps show that amassing wealth and preserving it are two different things in the investing world. Following the standard retirement advice of holding some bonds, international stocks, REITs, etc., is one of the better ways to avoid the stomach-churning experience of seeing a lifetime's savings evaporate by 5% in a single day.

Since I'll be doing that myself, I don't think I really have to fear a one-day loss of 5% of my savings. I've got a plan on how to save up my millions. So should you. 

Don't have a retirement plan? If the answer's "no," then today's your lucky day. Beginning this week, the Rule Your Retirement team will take subscribers through the eight-lesson "How to Plan the Perfect Retirement" online seminar. Reserve your seat by signing up for a 30-day free trial to Rule Your Retirement.

Whether you join us or not, remember that for any investor, the amount of time in the market is truly the greatest determinant of how much money you'll end up with to enjoy in your retirement.

Bill Barker does not own any of the stocks mentioned in this article. Microsoft, Wal-Mart, and Pfizer are Motley Fool Inside Value recommendations. Johnson & Johnson is an Income Investor selection. The Motley Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.