Have you made the mistake of opening your retirement plan statements lately?

According to researchers at the Urban Institute, retirement accounts have lost a collective $3.4 trillion since October 2007. As a result, people are pulling money out of the market -- stock mutual funds lost $5.2 billion in the week ending April 15 alone.

It's understandable if you've been tossing those statements unopened. It's certainly ugly out there, but consider this: Where would you be right now if you hadn't been saving for retirement at all?

All the difference in the world
The thing is, the very act of saving money for your retirement matters far more than the rate of return you get on that invested cash. If you save a large enough chunk of your salary, even at very modest rates of returns, you can wind up with more money than if you saved a smaller amount yet enjoyed higher returns.

Over 50 years, for instance, saving 15% of a $50,000 salary but earning a 3% annualized return handily beats saving 1% of that same salary but earning a 10% annualized return.


Save 1% per Year

Save 15% per Year

3% Annual Return



5% Annual Return



10% Annual Return



Assumes smooth returns and no raises.

Saving a significant chunk of your salary across your entire career means you're practically guaranteed to wind up better off than someone who saved virtually nothing at all. And if you do manage to see returns that approach the market's historical long-run 10% per year, just check out how very large the difference can be.

So, if you're hoping to wind up wealthy, the first step is to start saving as much as possible as soon as possible. Without that strong foundation of savings, there's virtually no way the market will get you there. With it, you're simply that much more likely to amass a significant chunk of money.

If you don't happen to have your whole career ahead of you, you may still wind up wealthy -- but since you won't have as many years for compounding to work its magic, it's even more critical for you to save a larger chunk of your cash.

Is it safe to invest yet?
As the chart above demonstrates, the more you save, the more that compounds -- but the higher the rate of return that applies to that savings, the more you'll end up with in the end.

The stock market has been a tremendous tool for building wealth over the long term -- despite its abysmal performance since the end of 2007, or, for that matter, during the Great Depression.

But even if the market never again provides double-digit annual returns, the fundamental truth from that first chart still applies. The more you're able to save, the more you'll end up with, regardless of your returns. That holds true regardless of whether you wind up earning 10% annually or 3%.

Additionally, at some point, the stock market is going to reflect business realities. While the market and the overall economy may be contracting, not every company is on the verge of failing. Just take a look at these companies and how they've performed this year:


TTM Net Earnings
(in Millions)



Microsoft (NASDAQ:MSFT)


Wal-Mart (NYSE:WMT)


Verizon (NYSE:VZ)


McDonald's (NYSE:MCD)


CVS/Caremark  (NYSE:CVS)


Kraft Foods (NYSE:KFT)


With earnings like that amid a deep recession, there's good reason to believe they'll survive this mess and once again thrive as the economy recovers.

With the right long-term perspective and an investing strategy that's centered on a commitment to savings, you can still wind up wealthy over time.

The long term, one day at a time
Whatever your long-run returns, the most important piece is saving the money in the first place. Once you have retirement savings, you can make smart choices that will make sure you can retire in style -- but it won't happen unless you save.

At Motley Fool Rule Your Retirement, we specialize in helping people make those smart choices. If you'd like to see what we recommend, join us at Rule Your Retirement today. For more information or to start your 30-day free trial, click here.

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At the time of publication, Fool contributor Chuck Saletta owned shares of Microsoft. Kraft Foods is a Motley Fool Income Investor selection. Microsoft and Wal-Mart Stores are Inside Value picks. The Fool has a disclosure policy.