Max Out Contribution Limits To Prepare for Retirement

Households headed by someone age 45 to 54 would appear, at first glance, to be in better shape than their younger counterparts. They make more money, $61,100 a year, and have a six-figure net worth.

Yet their financial situation is more dire than that of young people, financial advisers said. Like young people, those who are in this demographic haven't saved nearly enough for retirement. Unlike the young, they don't have much time to make up the deficit.

"They're the ones in the most trouble," said Brad Glickman, senior vice president at financial planning firm Bernard R. Wolfe & Associates Inc. in Chevy Chase.

More than 40 percent of families headed by someone in this age range have no retirement account at all. Of those who do, the median value is $55,500, which planners said is woefully inadequate to fund retirement. "If they're used to living on $61,000 a year, that's not going to last them very long," Glickman said.

To support themselves at 80 percent of their current income from age 65 for the rest of their lives, this family would need more like $1.5 million in savings at retirement, said Jaco Jordaan, a financial planner with PNC Advisors, the wealth-management arm of PNC Financial Services Group Inc. These families only have 10 to 20 years left to accumulate that kind of cash, which would be a major challenge, Jordaan said.

He would advise a family in that situation to begin maxing out contributions to their 401(k) or similar retirement plan at work, including taking advantage of "catch-up" provisions that allow larger tax-deductible contributions to such plans than younger workers can make. Such families may want start a regular or Roth IRA, as well.

If they do not sharply increase their savings rates, these middle-aged families will be forced to live a significantly more modest existence during retirement than they do now.

"This will not be retirement on a yacht for this family," said Jordaan. "At the pace they're going, they'll have some real lifestyle adjustments."