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Source: Flickr user Caspar Diederik. 

Retirement is the "finish line" that many Americans strive for, but it's a boundary that a substantial number of people may simply never reach.

According to Bankrate, which examines the financial wellness of Americans with its monthly Financial Security Index reports, just 23% of 1,004 respondents in its June press release stated they had enough money in their emergency savings to cover six months or more worth of expense. A staggering 50% of respondents either had no emergency savings whatsoever (26%) and were living paycheck to paycheck, or they had only enough money to cover three months or less of expenses (24%). 

This retirement struggle is further explained by the Federal Reserve's August data, which showed that 31% of adults have no savings whatsoever, and 19% of Americans near retirement age (age 55-64) have nothing saved for retirement.

The grim reality is that unless Americans start thinking early and often about their retirement, it's probably not going to happen.

How 10 days can make a big difference in your retirement
But, there's an equally important ingredient to a healthy retirement that investors often overlook -- one that if played right, could be the difference between retiring early or putting your retirement out even further. And here's the amazing part: This "secret ingredient" can make all the difference over the course of just 10 days.

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Source: Flickr user Kayla Kandzorra.

According to J.P. Morgan Asset Management, utilizing data from Lipper over a 20-year period from Dec. 31, 1993 through Dec. 31, 2013, a person who stayed fully invested in the S&P 500 and never sold, despite two substantial recessions (the dot-com bubble and the Great Recession) would have netted a promising 483% return. If an investor had missed just the 10 best days for the S&P 500 in a span of more than 7,300 days, their return would instead have been just 191%. By the time an investor misses the 30 best days, their gains have almost entirely been wiped out. 

In other words, the secret ingredient is time.

Imagine if the above example were based on an investment of $100,000. "Why $100,000," you ask? According to a study from LearnVest and Chase Blueprint in 2012, 45- to 54-year-old individuals had a median $101,000 in retirement savings.

Based on our example, missing the best 30 days for the S&P 500 would have left our investor with less than $120,000 two decades later. Missing the 10 best days would have netted our investor solid gains and an end total of $291,110. However, staying the course and buying stocks for the long run in the above example gave our fictitious investor $583,320 after 20 years. That's close to a $300,000 difference that boils down to just 10 days. That substantial sum could allow you to retire early.

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Source: J.P. Morgan Asset Management using data from Lipper on the S&P 500.

The benefits of buy-and-hold investing
Time is the greatest ally an investor has, meaning that buy-and-hold investing can give everyone a chance to retire the way they've always dreamed. Here are just a few of the benefits buy-and-hold investing can bring to the table.

  • It's really easy. Finding a great stock may be a lot of work, but the great thing about buying for the long term is that you won't have to worry about timing your buys or sells. Great stocks tend to stay great for a long time, meaning anyone can potentially be a successful buy-and-hold investor.
  • It pays dividends. OK, so not every great stock pays a dividend, but a lot of companies that have shown the ability to survive the test of time do share their profits with shareholders. The great thing about dividends is they can be reinvested back into a stock over time, compounding the dividend payout as well as the gains.
  • It's proactive. Buying for the long term removes emotions out of the mix and tends to keep investors focused on the broader economic and industry trends rather than the fleeting concerns of active traders.
  • It reduces risk. By sticking to a long-term investment game plan you have the opportunity to correct poor investments through time and compounding gains. Let's face it, not every stock you pick will be a winner. However, all you need to do is hit a home run once, and you can potentially cancel out a number of previous losers, and then some!
  • It reduces mistakes. Lastly, as we examined above, it reduces hasty decisions and the desire to try and time the market, which isn't a strategy that has proven effective over the long run. In essence, it keeps you on track to retire sooner based on J.P. Morgan Asset Management's figures.

In sum, the earlier you start investing for your future, the quicker you may be able to hit your retirement goals. Of course, that begins with diligent saving habits and remaining committed to a long-term outlook. Always remember these 10 days could wind up deciding your retirement -- don't be caught on the outside looking in.

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.

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