not saving enough wrong amount of risk overconcentration chasing what's hot raiding retirement accounts overtrading, ignoring expenses

NEW YORK (MONEY Magazine) - It's one of the most frequently made New Year's resolutions: I'm going to save some serious money. No wonder.

Nearly half of those who took the MONEY/MLIM survey confessed that they had waited too long to start saving and investing, and more than a third said that when they did, they didn't put enough away.

"Our survey results are a wake-up call to people in their twenties and thirties: Get going," says Robert Doll, president and chief investment officer of Merrill Lynch Investment Managers.

Certainly there's opportunity. The 2001 tax law cleared the way for Americans to sock more in their 401(k)s each year through 2006 -- for 2005, the limit goes up to $14,000 per account holder (plus an additional $4,000 if you're 50 or over). IRA contribution limits also go up in 2005, to a maximum $4,000 (this year the $500 catch-up provision for those 50 or over remains the same).

Unfortunately, most households don't come close to maxing out. The average personal savings rate is now less than 2 percent of income, and the average household has a net worth of just $264,000 at retirement, not including home equity.

That's not going to get you very far. How come we're not doing better? Many of us still have it burned into our brains that stocks will deliver the 18 percent annualized returns of the '80s and '90s. So deep down, we figure we can start later and save less.

That was Talib Horne's attitude. When he started working for an educational services company in 1993, the stock market was riding high, and Horne figured he had plenty of time.

He moved in with his mom and used his $25,000 salary to live it up without saving a dime. He bought a silver Mitsubishi Eclipse and vacationed in Cancún and Vegas. As his salary climbed, he moved into an apartment of his own but saved little. By age 30, he was making $45,000 but putting just 3 percent of his pay into his 401(k) and earning only half the matching dollars that his company offered.

"My priorities were mixed up," admits Horne, now 33 and the director of the East Harbor Community Development Corp. in Baltimore. He has since mended his ways but estimates that he left $51,000 on the table by not maxing out during all those years. If he had let that money ride to age 65, he could have had an extra $600,000 if his investment returned 8 percent a year. Ouch.

Between your retirement plan at work, your IRAs and fully taxable investments, you should be putting aside at least 10 percent of your gross income -- 15 percent if you're over 50. Anything less and you're kidding yourself.

And the sooner you start, the better. Assuming an 8 percent return, every dollar put away at age 30 is worth more at retirement than $3 saved at age 50.

"No one looks after your money like you do," says Jeff Claudio of Crestview, Fla. And few have been so successful at looking after their money as Jeff and wife Leonora. Email Millionaires in the Making: New York transplants to the Gulf Coast, Jeff and Leonora's retirement strategy pays off early.

If you're not anywhere near those savings targets, resolve to start somewhere in 2005. Begin with, say, 3 percent of your income. Then raise that figure by a percentage point on specific dates, like next Fourth of July and then the following Christmas.

Some employers offer a service that automatically ups your 401(k) contributions at certain intervals; if yours has it, sign up. Or resolve right now to put half of your next raise or year-end bonus into savings. Then do it.