The five tips below will help you make the most of that limited time, and put you on track in your efforts to make your golden years as comfortable as possible.
1. Make sure you're getting your free money.
Many employers will provide matching money based on the amount you contribute to your 401(k). Check your employer's policy on matches and make sure you're socking away enough to capture every single dime the boss will give you. If you hurry, you may even still have time to adjust your contribution and get the most from your 2012 match.
Why this matters: When combined with the potential tax savings, a 401(k) match may very well let you double your money, instantly. There are very few other investments that give you the opportunity to get that large an instant return, and even fewer that provide that type of return with such certainty.
2. Diversify out of your employer's stock.
You may work for the best company on Earth, but one of the most dangerous things you can do is to have your savings and your paycheck tied to the same business. If the company hits a rough patch, you may find yourself out of work and with a substantially diminished nest egg at the same time. Your own contributions should go into other options in the plan, and if your match comes in the form of company stock, check the rules on when you can sell it and shift your money into a different fund.
Why this matters: Remember Enron? It went from full-fledged Wall Street darling to becoming completely worthless as both an investment and an employer. And it really didn't take long for it to move from the list of "Best Companies to Work For" to the list "Biggest Collapses of the Century."
If you've taken out a 401(k) loan, make it a priority to pay it back quickly. The convenience of being able to borrow money with no credit check and the pleasure of paying yourself back rather than sending your money to some faceless bank make 401(k) loans tempting. But the gotchas can be downright ugly if you're unable to repay back the loan on schedule -- especially if you lose your job.
Why this matters: If you lose or walk away from your job, you could be required to pay the loan back in full within 90 days. If you can't, the outstanding balance is treated as a distribution. That means you'll get socked with taxes at your ordinary income tax rate and pay a 10% penalty on top of that if you're under age 59½. That's an ugly outcome, especially since the people facing it are often in a tenuous financial position to start with.
4. Try to invest more.
Most employees are allowed to invest up to $17,000 in their 401(k) plans in 2012, and those ages 50 or higher can contribute an additional $5,500 in catch-up money, as well. (In 2013, the general limit rises to $17,500, though the catch-up limit stays at $5,500.) All else being equal, the more you put away with a decent allocation plan, the better off you will be in retirement, even if your investing returns wind up being somewhat lousy.
Why this matters: The biggest benefit of maxing out your retirement savings plans is the long-term financial health you get from building a decent nest egg. In addition, if your 401(k) nickels-and-dimes you to death with its fees, the more you sock away, the less many of those fees will bite.
5. Take your Required Minimum Distribution, if you need to.
Once you reach age 70½ and are retired, you must start taking money out of your 401(k), even if you don't need to spend it to cover your lifestyle. There are special rules for the year of your first mandatory distribution, but for every year after that, you have to take money out of your account by Dec. 31 of each year.
Why this matters: If you don't, Uncle Sam will tax you at a rate equal to 50 percent of the amount you should have taken out but didn't. That's way too much money to lose for simply forgetting to move your money from one pocket to another.
Chuck Saletta is a contributing writer to The Motley Fool.