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Kiplinger: How to Retire Rich

How to Retire Rich: Smart Steps at Ages 40-55

By now, you've probably amassed a decent sum in your retirement accounts and another hefty sum in the college fund. You haven't? Join the club. A survey conducted in 2009 by Edward Jones, the financial services firm, showed that 20% of respondents ages 45 to 54 had saved nothing at all for either retirement or college. A recent survey showed that 62% of respondents had never heard of a 529 savings plan, much less contributed to one.

Here's the penalty for procrastinating on both those fronts: If you had started saving for retirement in your twenties, you would have had to carve out 13% of your salary every year to replace your income in retirement, according to an analysis by T. Rowe Price. Now, at 45, you'll need to sock away 29% of your salary to catch up. (And if you put it off until age 55, you'll need to save 43%, which won't leave you much for groceries or gas.) Uncle Sam gives the procrastinators of the world a powerful incentive to save: Once you're over 50, you can contribute significantly more to your 401(k) plan than your younger colleagues.

(iStock)

More From Kiplinger:
5 Costly Retirement Surprises
10 Things You Must Know About Social Security
10 Most Tax-Friendly States for Retirees



The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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