When people reach their 50s, a common realization is how close retirement is getting — and how far they are from having enough money to enjoy life after work.
While they know more of their money should end up in their 401(k) plans or individual retirement accounts, the path to get it there is often unclear. Given that the average retirement age is 64 for men and 62 for women, 50-somethings who are falling short need to get serious about fattening up their nest egg.
"Start with the low-hanging fruit," said certified financial planner Leon LaBrecque, managing partner and CEO of LJPR Financial Advisors. "For example, if you get a tax refund, put it in your retirement account."
For 2016, all workers — regardless of age — can contribute on a pretax basis up to $18,000 annually to their 401(k) plans. Those who are 50 or older are allowed to put an extra $6,000 in their accounts under what's known as the "catch-up" rule, for a total of $24,000 each year.
You can start taking advantage of the catch-up rule in the year you turn 50. While most 401(k) plans permit catch-up contributions, only about 36 percent of employers make matching contributions on that money, according to the Plan Sponsor Council of America.
The rules are not as generous for IRAs. Both traditional and Roth IRAs have contribution limits of $5,500 for all investors, with an extra $1,000 allowed per year for people who are age 50 or older.
While the rules sound good, they are useful only if workers take advantage of them.
"Most people can't afford to save $24,000 a year in a 401(k)," said Kristi Sullivan, CFP and owner of Sullivan Financial Planning.
Indeed, according to a July 2015 study from the Center for Retirement Research at Boston College, only about 9 percent of workers make contributions that come within 10 percent of the deferral limit.
I would just say if you're going to get a job in retirement, do something you want to do. Many of my clients are doing it to give their life more meaning.Leon LaBrecquemanaging partner and CEO of LJPR Financial Advisors
The study also shows that in the 55-to-64 age group, the typical household had just $111,000 in combined 401(k) and IRA balances.
So if you're among those trying to play catch-up, how do you find extra money to boost your savings?
The first task, say advisors, is to create a budget and track your spending.
"Take a hard look at your spending and see where you can reduce expenses," Sullivan said. "You'll end up spending less and saving more."
At one end of the expenditure spectrum is the collection of here-and-there miscellaneous purchases that barely seem to count.
But it's a case of the sum being larger than its parts. For instance, if you give up that $2 cup of coffee you grab every day on your way to work and your twice-weekly $10 lunch-out habit, you'd save about $120 a monthly. A year of doing that translates into around $1,500.
If you put that extra $1,500 every year into a stock fund through your 401(k) plan, after 10 years (assuming a 7 percent rate of return) you'd have an extra $21,000, thanks to the magic of compounding interest. If you left it there for another 10 years without adding another dime, it would grow to more than $43,000.
Another area in the budget where there's potential savings is typically people's biggest budget item: housing. Sullivan said that because many 50-somethings have grown children who are on their own, downsizing to a smaller home now instead of waiting until after retirement can be a great way to reduce your housing costs.
"And even if the kids are still home, maybe you should still consider downsizing [if it helps you] save for your retirement," Sullivan added.
Remember, too, a smaller home with a smaller mortgage might come with other savings bonuses: lower utility bills and reduced maintenance costs.
Once you've created a budget and trimmed your expenses where you can, any debt you carry beyond your mortgage needs to be addressed. All revolving debt — i.e., credit cards — should be paid off as quickly as possible.
One new kind of debt that some advisors are seeing more of in the 50-something crowd is student loans, and it's not because they're going back to school.
"They're cosigning student loans for their kids," Sullivan said. "The kid is on the hook for the loan, but so are the parents."
One of Sullivan's clients is paying more than $75,000 in student loans because his child remains unable to make the payments several years after graduating from college. The message? Don't cosign unless you fully understand the consequences.
Another way to boost your retirement savings is to work longer. If you thought you'd retire at age 62, consider pushing off your last day for several years.
The move would give you more years of income, retirement savings and portfolio growth.
Additionally, delaying when you start taking Social Security means a bigger payout when you do take distributions. It also means you'd avoid having to find your own medical insurance until Medicare kicks in at age 65.
And, of course, many people continue to work even after retirement, which provides another income stream.
"I would just say if you're going to get a job in retirement, do something you want to do," said LaBrecque of LJPR Financial Advisors. "Many of my clients are doing it to give their life more meaning."
— By Sarah O'Brien, special to CNBC.com