Save as much as you can, as early as you can. That’s the mantra financial planners have preached as the one true way to a comfy retirement. But this approach glosses over the fact that just when we know we should be putting away money for our future, life gets in the way. Kids need orthodontics, cars have to be replaced, college tuitions, wedding bills and divorces drain our savings. Before you know it, you’re approaching the big five-oh and your 401(k) isn’t close to seven figures.

A hopeless situation? Not if you’re willing to embark on a bold, creative catch-up plan. Consider the position Robert Douglas, owner of the Chicago executive search firm Chase Hunter Group, found himself in five years ago. The former actor and model had already blown two small fortunes – the first in a failed musical he financed in the ‘60s, the second with a drinking problem in the ‘70s (since resolved) – when he awoke on his 50^th birthday and realized he had zilch, nada, saved for retirement. "I thought to myself, ‘I only have 15 years or so left to work. How am I going to do this?’’ Even after that sobering insight, it took another three years before Douglas finally sat down with Chicago financial planner Greg Hilton and came up with a three-step retirement plan to make up for lost time.

The first step was to incorporate Douglas’ three-year-old executive search business, which specializes in placing medical professionals. That move allowed him to take advantage of a variety of tax deductions, including tax-deferred savings programs. Douglas has since launched a Simple IRA, a tax-deferred plan that lets him stash away $6,000 a year. His firm can contribute another 3% of his $100,000 salary, boosting his $6,000 to $9,000 this year. The second step of the plan fell into place in August. Douglas sold his condo and bought a two-story house that’s large enough for him to live in, run his business from and rent out space. The real estate will provide depreciation deductions, plus throw off rental income – nearly $20,000 a year at the moment. The third step: heavy-duty saving. Hilton and Douglas put together a stringent budget that required Douglas to pay off some $25,000 in credit-card debt and rein in his spending. Those moves will allow him to stick an additional $21,000 a year into no-load stock mutual funds.

Hilton projects that by the time Douglas hits 65, the combination of income from the rental property, Social Security and investments (assuming a conservative 7% rate of return) will provide Douglas, who is single, with an income of about $66,000 a year in today’s dollars. At that point, he would also have the option of selling his business or continuing to run it part time. The entire plan hinges, of course, on the success of Douglas’ business – and his ability to stick to the savings targets. Both seem assured so far. Douglas has expanded his recruiting staff to five people, including a physician he hired in January to recruit and place doctors. "The business is ahead of track," says Douglas, noting that he expects his revenues to at least triple next year. "And this year I’m going for more than $30,000 of savings."

December, 1998 Money magazine, pp. 88-89