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Related topics: mutual funds, investments, 401k, retirement, savings

OK, you're in your 50s and employed, but you haven't put much aside for retirement. Is there any way you can avoid an impoverished old age or working until you drop?

The answer, fortunately, is yes.

Even those getting a tardy start in retirement planning can take advantage of tax breaks and make other moves to reclaim lost ground.

This may require substantial changes in lifestyle, but they're almost certain to be less painful than what might be required in 10 or 20 years if you don't start now.

"It's not too late unless you think it is," says Andrew Hudick, a financial planner in Roanoke, Va., who regularly counsel clients needing to play retirement catch-up.

The most important first step is to start saving. Now. Even if you haven't worked out a plan, that's all right. It can come later. But you're going to need the money.

We're not talking about the savings you get by forgoing twice-a-week visits to Starbucks (SBUX, news). Instead, you need to start saving a good 10% of your gross income, or more.

The essentials of saving money

Essentially, there are two ways to save. One is to pay down debt that has a high interest rate and isn't tax-deductible, particularly debt owed on credit cards. If you're paying 20% on credit-card debt, you effectively get a 20% return on every dollar of that debt you pay off.

The other way, of course, is to put money away.

This is where the tax code comes in. Take full advantage of your company's 401k plan, in which contributions are excluded from current income. It's nice, but not crucial, if the employer matches part of the contributions. If you're in a 25% tax bracket, a $10,000 contribution to your 401k reduces your taxes by $2,500.

Federal law allows workers who will be 50 by the end of the year to salt away up to $22,000 of their own contributions, pretax, for 2011. Investments in such retirement funds grow tax-deferred until they are withdrawn, at which time they are taxed at ordinary rates. While tax rates may go up overall, your own rate is likely to be lower in retirement, particularly given the late start you're getting on savings.

If your employer doesn't offer a 401k, open an individual retirement account at a mutual fund company or brokerage. Savers who don't have an employer pension plan can put away up to $6,000 pre-tax a year.

If you do have an employer pension plan, you can deduct the full contribution if your modified adjusted gross income is $89,000 or less for a couple, or $55,000 or less for an individual.

But you can make a $6,000-per-person, nondeductible contribution to a Roth IRA if you have a modified adjusted gross income of up to $105,000 a year -- or $166,000 for a couple filing jointly. (A Roth grows tax-free, and all withdrawals in retirement are tax-free.)