I’m 50. Is it too late to save for retirement?

Q: I'm 50 and nearing retirement. I've done a little planning, but I'm concerned I may not have enough money to get me through. Is there anything I can do?

A: At 60, 55, or even 50, retirement is no longer something you're thinking about for the distant future. But even if your retirement planning is a little late, there are ways to play catch-up. Here are a few tips:

Get amnesia. Forget the mistakes you've made in the past and just dive in. You may not have as much money 10 years from now as you would have if you'd started saving at age 30, but at least you'll have something. And it may be substantial. Say you refinance your mortgage, freeing up about $2,000 in extra cash each year. If you put that money into a Roth IRA or another tax-deferred retirement account and invest it in stocks (we'll assume it earns 11 percent annually), it will be worth $39,123 in ten years; it will be worth $144,530 in twenty years; and it will be worth $443,826 in thirty years (when you're 80 and really need it!).

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Clarify your goals. Too many retirement stories today are out there to scare you. Instead of thinking in numbers, focus on how you'll really want to live and how much that will cost. Thinking: "I want to move to Scottsdale and build my own house. How much will that cost me?" is better than thinking: "I need to have $1.3 million by age 65." Even the rule of thumb that says you need 70 percent of your pre-retirement income to live comfortably after you slow down is up for debate. Some people can retire comfortably on 50 percent. Those who plan on summering on the Riviera and wintering in Telluride obviously need more.

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Give up some nonessentials. Run through your monthly expenses to see what you can live without. Start with your last credit card bill. Can you swap your weekly manicure for a biweekly one? How about eating out one or two times less each month? And then there are the big-ticket items. Do you really need a new car right now? Would a used one do? Come April, make sure you're taking all the deductions you can, and if you end up with a refund, be sure to invest it instead of spending it.

Jean Chatzky’s Bottom Line
THIS WEEK: Turning the young into savers
Want your kids to grow up to be big savers rather than big spenders? The younger they start, the better. One way to help them get on track: Teach them about delayed gratification.

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The game plan. It's tempting for kids to spend their weekly allowance right away. Perhaps they can't wait for the piece of candy or pack of baseball cards. But rather than letting them spend the money immediately, consider encouraging them to put away at least some portion of their allowance each week. Let them know that the money they set aside can be used to buy something even bigger after just a few months or a year. The satisfaction they get from saving up for a video game console or a bike will last far longer than the sugar rush from a chocolate bar.

The parental boost. You'll also want to show them you're doing the same thing. Let them see you depositing a check in the bank. Tell them that you're saving to buy something big — a new barbecue or a new car — then let them share in your enjoyment when you get it.

Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Her latest book, "Pay It Down: From Debt to Wealth on $10 a Day," is now in bookstores. Copyright ©2004. For more information, go to her Web site, www.JeanChatzky.com.

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