Many Americans haven’t saved enough for retirement. However, a big change to 401(k) plans could provide a boost for older workers.
The IRS in November unveiled higher 401(k) contribution limits for 2025, with employee deferrals jumping to $23,500, up from $23,000 in 2024.
While the catch-up contribution remains unchanged at $7,500 for investors age 50 and older, workers age 60 to 63 can save even more, thanks to changes enacted via Secure 2.0.
Starting in 2025, investors age 60 to 63 can make catch-up contributions of up to $11,250 on top of the $23,500 deferral limit. Combined, these workers can defer a total of $34,750 for 2025, which is about 14% higher than 2024.
“This can be a great way for people to boost their retirement savings,” certified financial planner Jamie Bosse, senior advisor at CGN Advisors in Manhattan, Kansas, previously told CNBC.
Roughly 4 in 10 American workers are behind in retirement planning and savings, primarily due to debt, insufficient income and getting a late start, according to a CNBC survey, which polled roughly 6,700 adults in early August.
For 2025, the “defined contribution” limit for 401(k) plans, which includes employee deferrals, company matches, profit-sharing and other deposits, will increase to $70,000, up from $69,000 in 2024, according to the IRS.