Several studies in recent years confirm that most U.S. workers haven't saved enough for retirement. TD Ameritrade's 2020 Road to Retirement report indicates that only 8% of savers between the ages of 50 and 59 have $1 million saved. A much larger percentage in that same age group, 37% to be exact, have saved less than $50,000.

If you're in that under-50k club, you'll have to make tough choices at some point. You can make them now by buckling down and committing to an aggressive financial plan, or make them later by downgrading your lifestyle to near-poverty levels. Sadly, that's what it takes to survive on Social Security alone.

Take action now while you're still working, and you'll have some flexibility to choose a better life later. If you wait and do nothing, you're locked into a meager lifestyle for the rest of your days.

Older woman looking at phone and laptop at home.

Image Source: Getty Images.

Presumably, you're not considering the do-nothing approach. Instead, you're ready to borrow two tactics from the FIRE (Financial Independence, Retire Early) movement to get your retirement outlook back on track, and quickly. FIRE principles have helped workers gain enough financial independence to leave the workforce decades before the traditional retirement age.

1. Save and invest half of your income

It's possible to accumulate a large nest egg in a short period of time, but it won't happen with $100 monthly contributions. The table below estimates how much you can save in 12 years if you contribute 30% to 50% of your salary to your retirement accounts. The figures assume you're investing those contributions and earning an average annual growth rate of 7% -- which is in line with the stock market's long-term performance.


Savings Potential With 30% Contribution

Savings Potential With 40% Contribution

Savings Potential With 50% Contribution

































Table data source: Author calculations. 

These values don't incorporate tax implications, which would come into play if you exceed allowable contributions in your 401k plan and IRA accounts. At 50 or older, you can contribute up to $26,000 in a 401k, not including your employer matching contributions. You can additionally contribute up to $7,000 in a traditional IRA, though this amount may not be tax-deductible.

After you max out your 401k and IRA contributions, put additional savings into a taxable brokerage account. You'll have to pay taxes each year on dividends, interest, and realized gains, but you'll have no withdrawal restrictions on those funds. To maximize your returns, invest your contributions in diversified funds that include large, established companies. An S&P 500 index fund is a reliable choice and a favorite of legendary investor Warren Buffett.

2. Establish new streams of income

Successful FIRE retirees also seek out other streams of income to reduce reliance on their savings. Before COVID-19, rental properties were a popular choice. Savers with good credit could finance properties and rent them out for enough to cover expenses and turn a profit. Today, that model is temporarily problematic, since many tenants who've lost their jobs in the pandemic recession might be having trouble paying rent.

There are other options, though. You could start a blog, launch a drop-ship e-commerce business, or take photos and earn royalties on websites like Shutterstock. You could also go the passive route and build up your portfolio of dividend-paying positions. Choose reliable dividend payers and reinvest the income to increase your share count and produce more dividends. Let that cycle continue for long enough, and you can build a nice stream of cash flow.

Fire up your retirement savings

You're not doomed to living out your senior years in your daughter's basement or a tiny apartment. As long you have 10 years on your side, you can make big strides in creating the retirement that you want.

Start by saving aggressively now and looking for supplemental sources of income. In a decade, you'll look back and be thrilled that you decided to fire up your retirement savings.