Are you looking to boost your retirement savings and take advantage of catch-up contributions? Starting in 2025, investors aged 60 to 63 will have the opportunity to make catch-up contributions of up to $11,250 in addition to the $23,500 deferral limit. This means workers in this age group can defer a total of $34,750 for 2025, which is a 14% increase from 2024.
At Extreme Investor Network, we understand the importance of maximizing your retirement savings, and these catch-up contributions can be a great way to do just that. Certified financial planner Jamie Bosse, senior advisor at CGN Advisors, highlights the benefits of this opportunity, emphasizing the potential for boosting your retirement nest egg.
According to a CNBC survey, approximately 4 in 10 American workers are behind in their retirement planning and savings. Factors such as debt, insufficient income, and starting late all contribute to this shortfall. However, with the increased “defined contribution” limit for 401(k) plans in 2025, which now stands at $70,000, there is an opportunity for older workers to save more for retirement.
Dave Stinnett, Vanguard’s head of strategic retirement consulting, recognizes the positive impact of the 401(k) catch-up contribution change for older workers looking to enhance their retirement savings. Despite this opportunity, not everyone age 50 or older is maxing out their 401(k) plans. Vanguard’s How America Saves report reveals that only 14% of employees deferred the maximum amount into their 401(k) plans in 2023, indicating ample room for improvement.
It’s clear from Vanguard’s data that deferral rates for 401(k) plans tend to increase with income and age. Participants under age 25 saved an average of 5.4% of earnings, while workers aged 55 to 64 deferred 8.9%. This underscores the importance of taking advantage of catch-up contributions and maximizing your retirement savings as you approach retirement age.
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