Late to the retirement savings game? Frugality can bail you out

Are you doomed to impoverishment in your elder years if you find yourself in your late 40s to early 60s with little in retirement savings? That is the basic message of the financial-services industry: Start saving early for retirement in the 401(k)/IRA era to harness the power of compound interest or else find yourself without enough time to shore up household finances later in life.

Here's a classic illustration of this perspective. The key assumptions are that you invest $250 a month, earn an average annual return of 8% and retire at age 65. If you start at age 25 you will have $878,570 in retirement savings by age 65. Wait until age 50 to begin and your retirement nest egg will be $87,086 at age 65. Ouch!

Clearly, the standard financial advice is good. Problem is, the approach isn't realistic for many people. Life is far from a smooth path for most people. Many end up saving much less for their retirement than the standard finance industry recommendations.

That's OK in many cases. You still have time on your side. What's underestimated by much financial commentary is the opportunity people have in their 50s and 60s to save more.

The trick is to keep working well into the traditional retirement years and plan on putting a large percentage of income into savings. Working longer also allows you to claim Social Security later.

There are a number of steps to take that can add to financial security later in life. Here are some suggestions to consider:

• Downsize into a smaller home. They are cheaper to own and run. Larger homes cost significantly more to maintain.

• Increase your traditional IRA or Roth IRA contributions to the ceiling of $7,000 for those 50 years and older in 2019.

• Eliminate debts.

• Avoid expensive cars and their costly repair and maintenance bills.

In other words, don't despair if it's unrealistic for you to save the recommended amounts for retirement in your 30s and 40s. Instead, embrace a frugal mind-set. Frugality isn't cheapness. Frugality means spending time with family and friends, embracing experiences and giving back. The frugal habit pays off big when you have the opportunity to save more of your paycheck later in your career.