This isn’t your typical retirement savings article.

I’m not going to tell you how you can become a millionaire by rejecting your daily cup of Starbucks. (By the way, a $3 cup sacrificed every day for 30 years at 7% only adds up to $110,000…so good luck retiring on that)

Nor am I going to reveal any investment secrets that will keep your money growing regardless of any market crashes.

My goal is simple – help you understand two things:

Behavior weighs more than financial knowledge You still have hope – no matter how little your retirement account is.

First, For The Behavior.

It’s not uncommon for me to speak with a person each week that is 40-50 years old and has saved nothing for retirement. Most think that starting their retirement savings now is a lost cause; but that couldn’t be further from the truth! They may not have millions at retirement, but with a little change in financial behavior, they may have a decent income stream from the money saved in the next 25-30 years.

For most people, the knowledge of saving isn’t the problem. They know it’s important and they probably have the tools (like a 401(k), 403(b), or IRAs) to get started. The real issue is behavioral. If you have the ability to save an extra $20 – $50 per paycheck, but just haven’t gotten around to contacting your payroll office, that’s behavioral. If you’ve been planning to open an IRA but keep putting it off – you got it…behavioral. It doesn’t matter how much someone knows about saving for retirement; if they don’t act on it, it won’t help them much.

Now For A Little Hope

Ok, you’re ready to seriously put away some money for retirement but want to make sure you’re doing it the best way possible. If you’re young and reading this article, I would highly recommend that you read more about Roth options that are available in your 401(k) plan or Roth IRAs. Peter wrote a great series about Roth accounts here.

If you’re a tad bit older and have 15 to 25 years of work ahead of you, here is a strategy that can bring your account up to a healthy amount by the time you’re ready to retire.

50+ catch up for IRAs and 401(k)s

Let’s assume that you have saved nothing. You’re serious about saving and want to start by maxing out an IRA. If you’re 50 or older, you can max out an IRA at $6,500 each year. If you’re really serious about catching up with your retirement savings, you can open an IRA for your spouse as well, as long as you file jointly and have enough taxable income to cover the contributions.

Your IRA $6,500 annually 7% return 15 years $174,772

Spouse’s IRA $6,500 annually 7% return 15 years $174,772

Together you can sock away over $349,544 towards your golden years. And who said there wasn’t any hope! Sure, it’s not millions, but it’s better than the $0 you had at age 50!

The math is even more favorable if you start at age 45. If you max out an IRA and continue for 20 years at 7%, you might see the account grow to be close to $268,000. Again, repeat for your spouse and that’s a healthy half million.

(Side note – I like to use a 7-8% average as a conservative measure of return. With the 20-year historical average of the S&P 500 around 10%, I think it’s safe to assume a lesser return for the coming decade since that average took into account the booming years of the 1990s.)

Don’t forget about your 401(k) and 403(b) as well. If you have the means to save more, those employer plans allow for a significantly larger amount to be saved each year. If you’re over 50, the catch up amount for these employer plans is $6,000, which, when added to a base of $18,000, comes to be $24,000 that you can contribute each year. If you’re maxing out your IRA at $6,500 you could essentially put away $30,500 each year into a retirement account. Yes, it’s unrealistic for most to do this, but it’s good to know that you can.

While you may feel behind in your retirement savings, don’t get discouraged and call it a ‘lost cause.’ It just takes some consistency in saving and you can put away a nice amount for your golden years.

Do you need to kick your retirement savings into gear? What are your goals for this next year?