60 years old and no retirement savings

(Money Magazine) -- Question: I'm one of those Americans who are just not financially prepared for retirement. I'm 60, but have very little saved because my money went into my own businesses, all of which eventually failed. I'm now working for a company and participate in its 401(k). But short of winning the lottery, I don't know what to do to be able to retire. Any suggestions? --Tony F., St. Louis, Missouri

Answer: Given your luck with businesses, I wouldn't count on the lottery. That said, there is still plenty you can do to improve your retirement prospects.

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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).

Ultimate Guide to Retirement

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• 401(k)s & company plans
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• Getting help

Before we get to your options, though, I want to point out for the benefit of other readers that your experience illustrates the danger of taking too narrow an investing approach with your retirement savings.

So you effectively invested like people who put all or most of their savings into their employer's stock. That's risky for a number of reasons. And despite the lesson of Enron, loading up on company stock remains a problem for a significant number of people, according to a recent Hewitt Associates survey.

I realize that you poured all your dough into your businesses because you wanted to do everything you could to make them succeed. My father, who owned a struggling men's wear business that eventually went belly up in the 1960s, pretty much did the same thing. So I have a lot of admiration for people who take financial risks to achieve their dreams, even if their aspirations don't pan out.

But the fact remains that in order to have a decent shot at retirement, it's imperative you don't put all your savings eggs in one basket. If anything, the need to diversify is even more critical when you're starting or running your own business.

But what's done is done. The issue now is how to proceed from here.

Clearly, you're not going to be able to accumulate an entire career's worth of savings in the number of working years you have left. But even at your age, you can still build a nest egg large enough to make a material difference in your retirement lifestyle.

To get an idea of how far you can go with a late start, I suggest you take a look at this recent article from an investment firm's newsletter. It shows how much someone who's 55, earns $80,000 a year and has no savings might accumulate in a 401(k) by age 65 under a variety of scenarios.

For example, if the hypothetical 55-year-old contributes 6% of pay, gets 3% annual raises, receives a 3%-of-salary employer match and earns an investment return of 8% a year, he'd have just under $150,000 at 65. That seems eminently doable to me and, while hardly allowing for a lavish retirement, certainly beats doing nothing.

At the other end of the spectrum, if our fictive 55-year-old follows the same scenario as above except each year manages to make a Herculean contribution of $16,500 to his 401(k) plus a catch-up contribution of $5,500 (the current maxes for this year), he'll end up with a much heftier balance of just under $445,000.

I understand these figures aren't guarantees. Raises and investment returns could come in lower, and hitting big savings targets year after year isn't a cinch either. I realize too that the person in the example is 55 and you're 60, which means to get comparable results you would have to work until age 70, or settle for a smaller nest egg.

The point, though, is that you're not doomed to a grim post-career existence because you're starting to save at a relatively advanced age. If you're willing to make an all-out effort, you can still salvage a decent retirement -- and live a heck of a lot better than if you just play Lotto.

While that pedal-to-the-metal effort should start with revving up your savings rate, there are many other things you can also do, ranging from retiring later, working part-time in retirement and delaying Social Security to boost the size of your payments. If you own a home, you can also look into turning your equity into spendable cash while still living there by taking out a reverse mortgage (although you want to be careful not to fall for the dubious sales pitches some purveyors of these loans make.)

I don't want to underestimate the magnitude of the task ahead of you. It's going to be a challenge. But if you had the drive to start your own business and work hard to keeping it going as long as you could, then I expect you know a thing or two about setting and working toward goals.

So I suggest you think of your retirement as your next big venture. And then do all you can to make it as successful as possible.