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A Catch-Up Guide to Retirement

Even if you got a late start, you can still build a sizable nest egg during your final decade of work.

Late bloomers, take heart: There is still time to build a respectable nest egg for retirement. And if you're really disciplined, you could amass nearly half a million dollars during your final decade of work. It may not be easy, but it is possible.

A majority of Americans say that they are behind in saving for retirement, according to a new survey by TD Ameritrade. When asked why they were concerned about the size of their retirement savings, more than half of the respondents said they had little money left to save after meeting regular expenses. And a majority added that they got a late start.

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The key to making up for lost time is to reverse your priorities. Rather than waiting until the end of the month to shift money toward savings, put your savings goal first and adjust your budget to what's left over. The old adage of "pay yourself first" is easy to apply when you have access to an employer-based retirement-savings plan, such as a 401(k). The money goes directly from your paycheck to your retirement-savings account before you have time to spend it.

Money contributed to a 401(k) or similar retirement plan is not taxed. Say you make $50,000 a year and contribute 10% of your salary -- $5,000 -- to your 401(k) plan. You benefit in two and possibly three ways:

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--You're taxed on only $45,000, which saves you $1,250 in tax if you're in the 25% federal income-tax bracket.

--Your $5,000 contribution grows tax-free until you withdraw it.

--Any amount that your company puts in as a match is pure gravy. If your employer adds 50 cents for every dollar you put in, that's an immediate 50% return on your investment.

Starting from scratch

Let's assume you're 55 years old and you've saved zilch so far for retirement. Don't despair. You don't have to be a Wal-Mart greeter well into your eighties to keep food on the table. Here's an example from T. Rowe Price that shows it's never too late to save for retirement: Say you earn $80,000 a year and your company offers a 3% match in your 401(k) on the first 6% of pay. If you contribute just enough to your plan to capture your employer's match -- 6% -- you could accumulate nearly $150,000 by age 65 (assuming your investments grow by 8% annually and your salary grows by 3% a year, which would raise the dollar amount of your contribution and your employer match).

Dramatic results

If you really want to build a big retirement stash and you're very disciplined, you'll be amazed at how much you can squirrel away during your final decade on the job.

For example, if you contributed $16,500 a year (the current maximum limit for retirement-plan contributions) for each of the next ten years, your savings could grow to nearly $350,000, assuming the same employer matching contributions and investment earnings. And if you took advantage of catch-up contribution limits for workers 50 and older and saved the maximum $22,000 a year for each of the next ten years (which would represent a whopping 28% of salary in the first year), you could accumulate nearly $450,000 by the time you were 65.

"Saving that much may be very difficult for many people," acknowledges Christine Fahlund, senior financial planner for T. Rowe Price. "But the potential results -- as much as half a million dollars built up in retirement savings over a decade -- are significant enough that it may be worth making such a strong commitment to saving," she says.

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