(MONEY Magazine) – Okay. You know you should have been saving 10% of your income for retirement every year since you reached age 30. You should have taken full advantage of tax-deferred retirement accounts and savings plans to build up a portfolio of, say, $500,000, rather than assuming that Social Security and a pension would provide all of the income you will need once you stop working. But you didn't -- and retirement is just a few years away. There's one small consolation: you have plenty of company. Most middle-aged Americans -- even those with household incomes above $75,000 a year -- have a hard time putting away much money in the face of hefty mid-life expenses like mortgages, college for the kids, and medical care. ''Over 60% of our clients who want to retire comfortably within 10 years won't be able to do it -- unless they make big changes fast,'' says George E.L. Barbee, executive director of Price Waterhouse Personal Financial Services in Waltham, Mass. If you are such a latecomer, someone close to retirement who hasn't been putting away enough to finance an acceptable life style, get real -- now. ''It's crucial that you spend less and save more, accelerating what you should have been doing all along,'' says Robert Preston, a retirement consultant in Danbury, Conn. The belt-tightening may be uncomfortable, but it need not be unbearable.

Consider the extreme case of Richard and Barbara Hadden of Cincinnati, age 58 and 62, respectively. They earn about $80,000 a year and want to retire in three or four years. Using the rule of thumb that retirement income should equal at least 80% of pre-retirement income, the Haddens will need about $64,000, or roughly $50,000 after taxes, to maintain their standard of living. But they have saved less than a quarter of what they will need to produce that income. People like the Haddens can count on Social Security and pensions to provide only the basics. For instance, Barbara expects a $16,000 annual pension when she leaves her $40,000-a-year job supervising Cincinnati's nutrition program for poor mothers and children. And the couple estimate that Social Security will provide $14,000 a year. Any luxuries that are part of their dream retirement will have to come from savings. To date, however, the Haddens have set aside only $105,000, nearly half of it from a windfall -- an attorney's fee that Richard earned by helping to settle a medical malpractice suit in 1987. Normally he clears no more than $40,000 annually from his law practice. Fortunately, he expects a big fee for another malpractice case this year, about $90,000, which will leave him $60,000 or so after taxes. He should sock it away, exactly what all latecomers should do with unexpected gains -- for example, from an inheritance or a generous job-severance package. Even so, the Haddens' portfolio, most of which is sheltered in tax-deferred IRA and Keogh accounts, would grow to only around $218,000 in four years. The couple have fallen behind in their saving because of a common problem -- a lifelong reluctance to plan ahead. After graduating from Harvard Law School in 1957 and failing the Ohio bar exam, Richard embarked on a three- decade quest for career fulfillment. He worked for 10 years as a book publishing executive, for five years as an Episcopal priest and finally as a lawyer, hanging out his shingle in 1976. Along the way, his 23-year first marriage failed, after producing two daughters and a son. Barbara has a similar story. She fell in love with acting while she was a student at Denison University. Upon graduating in 1950, however, she worked as a salesperson for a record company. She stayed home for four years with her two young sons, took her present job in 1974, and divorced her first husband two years later. When the Haddens got married in 1983 they had only one major asset, Barbara's $65,000 house (which carried two mortgages totaling $47,000). They sold it the next year to buy their present home, a two-bedroom condominium now worth $100,000. Because their equity is just $20,000, trading down to a smaller place -- a bountiful source of cash for many people their age -- wouldn't be much help. What's worse, even as they play catch-up in their retirement planning, the Haddens can't seem to stop splurging. They eat out frequently (cost: at least $3,000 a year) and have just embarked on their fourth three-week tour of France in eight years (cost: $3,500 to $4,000 a trip). Indeed, after retirement, the couple hope to live for a year or two in France so that Richard can attend cooking school. By the time they retire, the couple intend to have liquidated their investments to pay off all debts, including their $80,000 mortgage. That will cut their fixed expenses to less than $1,500 a month, they say, easily paid from Barbara's $1,700-a-month income from her pension and Social Security. Her health plan will cover both of them for life -- an amenity many other retirees lack -- and extras will come out of Richard's $800 monthly Social Security income and part-time earnings from malpractice cases. ''We're healthy and resourceful,'' says Barbara. ''We'll cope.'' If you have a similar attitude, listen to what experts think of their plan. ''The Haddens are drowning in optimism,'' says Helen Stecklein, a retirement adviser in Minneapolis/St. Paul. Another specialist, Cincinnati certified public accountant and financial planner David Foster, estimates that on top of their pension and Social Security, the Haddens must have $726,000 in savings to retire in 1995 and maintain a $50,000-a-year life style. To amass that amount, they would have to work for 10 more years and save $2,500 a month. Alternatively, the Haddens could resign themselves to a retirement life that costs only $34,000 a year in today's dollars. This 32% reduction in their expenses would reduce the size of the portfolio they'd need to $240,000 by Foster's estimate -- a goal they can reach in four years by saving $400 a month. But, says Stecklein, ''they won't have much money for dinners out, travel and cooking school, let alone a cushion for catastrophic illness.'' The Haddens aren't concerned about debility sapping their savings though. ''There are anti-aging drugs, like human growth hormone, that can keep us healthy,'' Richard insists. The best solution may be something in between: if the Haddens work and save $20,500 annually for seven years, they will have an income of $40,000 a year in today's dollars. In addition, both advisers agree that the Haddens should stop investing aggressively. Although 54% of the couple's portfolio is in cash, much of the rest is in speculative investments -- including a $4,000 flier in 1978 on a jojoba bean grower in Costa Rica. ''I'm pretty sure the shares are worthless now,'' says Richard. ''They should sell their stocks and small-company funds,'' Foster says, ''and put 40% to 45% of their capital in less risky funds that invest in large, dividend-paying companies.'' Among his favorite funds are Twentieth Century Select (up 16.3% in the 12 months that ended March 31; 800-345-2021) and Neuberger & Berman Partners (up 10.2%; 800-877-9700). He also recommends that the couple move 35% of their money into a long-term bond fund such as Vanguard Bond Market (up 12.7%; 800-662-7447) and put the rest in a top- quality money-market fund. Such a portfolio could return 10% or so a year. Damage-control strategies are the only way people like the Haddens can make up for 20 years of missed savings. Confronting the tough choices, Richard confesses: ''I've been thinking of working as a minister again for a few years -- but now it looks like I might have to do it until I'm 75.''