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If you’re over 50 and looking to bolster your retirement savings, significant changes are coming in 2025 that you should be aware of. Under the 2022 Secure Act 2.0, the catch-up contribution limits for 401(k) plans are set to increase, potentially making it easier for older workers to save more, according to CNBC.
Currently, employees can defer up to $23,000 into 401(k) plans for 2024, with an additional $7,500 for those aged 50 and older.
However, starting in 2025, workers aged 60 to 63 will be able to contribute up to $10,000 or 150% of the catch-up limit — whichever is greater.
Although the IRS has yet to announce the specific catch-up contribution limit for 2025, experts believe this change will significantly aid those looking to enhance their retirement savings.
“This can be a great way for people to boost their retirement savings,” said Jamie Bosse, a certified financial planner at CGN Advisors in Manhattan, Kansas.
Despite the benefits, many Americans face a retirement savings shortfall. According to a CNBC survey, around 40% of American workers are behind in their retirement planning and savings. Vanguard’s data reveals that only about 15% of eligible workers made catch-up contributions last year, with a significant portion still needing to catch up.
Additionally, another change coming under the Secure Act 2.0 involves Roth catch-up contributions. Starting in 2026, catch-up contributions for higher earners — those making more than $145,000 from a single company the previous year — will need to be made in after-tax Roth accounts.
This rule, however, has been delayed, allowing workers to continue making pre-tax 401(k) catch-up contributions through the end of 2025.
Many older workers are concerned about their retirement prospects, so these changes may provide much-needed relief.
As 2025 approaches, it’s essential for those over 50 to familiarize themselves with these new rules, as they could be pivotal in securing a more comfortable retirement.
