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More Americans than ever think they may never be able to retire. But with some work, you can still make retirement work -- even if you're coming in late to the game.

Many people intend to save for retirement but never get around to it, as daily demands on your money add up over time -- especially in a recession. But it's more important than ever to have your own savings to supplement increasingly shaky Social Security and pension plans. So without further ado, let's talk about three simple steps you can follow to build up savings for your retirement.

Step 1: Let the IRS help.
Every year, workers have the chance to use the tax laws to their advantage. With a traditional IRA, you can save $5,000 every year toward your retirement -- and often get tax breaks worth up to $1,750 in the process. The same goes for 401(k) plans at work, except they have a much higher $17,000 contribution limit this year.

Once you turn 50, you get even higher limits. So-called catch-up contributions add $1,000 to the IRA limit and $5,500 to 401(k) limits. Add all that up, and you could get IRS help on well over $2,375 in contributions every month if you're 50 or older.

Step 2: Cut your costs.
IRAs and 401(k)s are great, but where will you get money to fund them? The key is to save as much as you can now. By doing so, you won't just free up money to save for your retirement -- you'll also train yourself to live on less.

That's a trend that many retirees continue to follow after they stop working. Things like downsizing to a smaller home or relocating to a less expensive area can save you thousands in expenses, stretching your savings further. That's a vital component of a successful financial plan these days.

Step 3: Invest aggressively
If you're just getting started with retirement savings and don't have as long of a time horizon as you'd like, you can't afford to play it safe. That doesn't mean taking a flyer on penny stocks, but you do need to take some risk in your investments.

One good place to look is in mid-cap stocks. As the most recent issue of our Rule Your Retirement newsletter discusses in more depth, mid caps have much of the growth potential of smaller stocks while being a bit more stable. That's an attractive combination. Let's look at five stocks that some of the top mid-cap funds have added positions in recently:

  • Family Dollar (NYSE: FDO  ) gained notoriety during the 2008 market meltdown by actually seeing its stock rise. The deep discounter has given bigger-box competitors a run for their money by catering to consumers who've been hurt by the recession.
  • DENTSPLY (Nasdaq: XRAY  ) makes dental pastes, anesthetics, fluoride, and other dental-related consumable products that you use every time you go to the dentist. That may sound tame, but over the past 20 years, the stock has posted almost 14% annual growth.
  • Lincoln Electric (Nasdaq: LECO  ) makes welding tools and supplies. That's been a hot industry lately, with applications in the energy business. But Lincoln is best known for its no-layoff policy, one that it's followed successfully through thick and thin for decades.
  • Silver Standard Resources (Nasdaq: SSRI  ) is in the hot silver market. The stock fell when the company had to mark down its reserves at its Pirquitas mine, but with shares down more than 50% from their highs, Fool silver expert Christopher Barker thinks that Silver Standard has plenty of upside potential.
  • Southwestern Energy (NYSE: SWN  ) is among the lowest-cost producers of natural gas in the industry. That's essential with currently weak gas prices, but it also puts the company in position to profit more when natural gas recovers.

Mid caps shouldn't be the only stocks you own. But if you can get comfortable with the risk involved, mid caps may give you the combination of safety and growth potential that you need.

Be smart about retirement
Sure, these three steps aren't always easy to follow. But if you do, you'll get a lot closer to your retirement dreams than you imagined possible.

If you want more good ideas for retirement stocks, we've got them. Let me invite you to read the Fool's latest special report, which reveals three stocks that will help you retire rich. It's absolutely free, but it won't be around forever, so click here and read it today. Here's to a prosperous retirement!

Fool contributor Dan Caplinger tries to keep everything simple. You can follow him on Twitter here. He doesn't own shares of the companies mentioned in this article. Motley Fool newsletter services have recommended writing puts in Southwestern Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy is never complicated.

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