Health problems, no job, no retirement savings

(Money Magazine) -- Question: My husband lost his job and I had breast cancer. We're turning things around now, but we still wonder: How can we play catch up and start saving again? And at 52 years of age, is it too late? -- V.H., Missouri

Answer: I think Old Blue Eyes' had the right approach to dealing with adversity when he sang in "That's Life": "Each time I find myself flat on my face, I pick myself up and get back in the race."

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Walter Updegrave is a senior editor with Money Magazine and is the author of "How to Retire Rich in a Totally Changed World: Why You're Not in Kansas Anymore" (Three Rivers Press 2005)

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Yes, I know that never-say-die mindset might seem hokey to some people. It's more fashionable today to strike a detached "whatever" pose or wallow in victim status. But deep down I think most people still believe in the keep-plugging-away sentiment Frank expressed in that song.

In fact, one of the great rewards of writing this column has been to hear from people like you who, despite suffering all manner of personal setbacks, simply refuse to give up. So too late to play catch up at 52? Not by a long shot.

That said, it's not going to be easy. To make up for whatever ground you have lost, you're going to need to save more than you otherwise would have -- absent the setbacks.

Depending on how far behind you fell as a result of your illness and your husband's bout of unemployment, you may also have to postpone retirement a few years to give your nest egg more time to grow before you dip into it.

What's most important now is that you start saving again. The sooner you do that -- and the more you manage to put away -- the better your retirement prospects will be.

Just to give you a sense of how much you might still accumulate for retirement even starting from your early 50s, let's look at a hypothetical scenario.

Let's say your husband now makes $50,000 and manages to save 10% of that salary in a 401(k) or similar retirement savings plan. And let's further figure that he gets 2% annual raises and earns a 7% annual return on the money he stashes away.

Based on those assumptions, your husband's account balance at age 65 would be roughly $115,000. And if he holds off retiring until age 67, he'd be sitting on a nest egg of nearly $146,000.

The outlook is even brighter if your husband's employer kicks in a match of, say, 25% of what your husband contributes. In that case, your hubby's account balance would be upwards of $144,000 at 65, or $182,000 if he keeps working and saving until 67.

Granted, these aren't sums that are going to allow you to lead a lavish lifestyle. But throw in Social Security benefits for both of you -- plus whatever savings you had already socked away before you and your had problems -- and you and your husband should be able to find a way to get by with a reasonable lifestyle.

And you'll certainly be better off than if you don't do anything and have to make it on Social Security and whatever savings you've managed to accumulate to date (plus the return on those savings).

By the way, I didn't factor in any work or savings on your part. But if your health situation allows you to work as well, then you and your husband would be able to build an even larger retirement savings stash.

I want to emphasize, though, that the point of the example above isn't to project a specific amount of money you can count on. That will depend on how much you make, how diligently you save, what investment returns you earn, etc.

Rather, the idea is to demonstrate that, even at this point in your life, you can still make a real difference in your retirement prospects. (To get an idea of how big a difference, you can go to our Retirement Planner tool and compare scenarios in which you save varying amounts.)

More than anything else, your success hinges on your ability to save those bucks. I think your best shot at doing that consistently is through payroll deductions to a 401(k) or similar plan. That way the money is stashed away before you even get a chance to spend it.

If that's not an option, then consider opening a traditional IRA or Roth IRA and investing in a mutual fund that will automatically transfer money from your checking account to your fund account every month.

Again, the idea is to arrange things so that you save each month without having to make a conscious effort to do so, although at this point you want to exhaust every possible trick to squeeze more savings out of your income.

As for investing what you save, you want to beware of overdoing it and taking too gung-ho an approach in search of lofty gains to make up for lost time. You might be lucky and get the higher returns you want. But you also run the risk of seeing your nest egg shatter if we have another market crack-up as in 2008.

At the same time, you don't want to be so cautious that you end up stunting your nest egg's growth.

Finally, given what you've been through on the medical front, I'm sure I don't have to tell you the importance of keeping up your health -- and your health coverage.

The new health reform should make it easier for people with preexisting conditions to maintain coverage, although until those provisions kick in, you may want to check out this page of questions and answers from the Department of Labor about the portability of health coverage just to be sure you don't inadvertently fall through the cracks.

The bottom line is that you and your husband still have plenty of time to improve your chances for a secure retirement. And the sooner you start saving, the better your chances will be.