As many Americans struggle with insufficient retirement savings, a recent IRS update might offer a helpful boost, especially for older workers. Announced in November, the IRS will raise 401(k) contribution limits for 2025, increasing the maximum employee deferral to $23,500, up from $23,000 in 2024.
This change is part of a broader effort to make retirement savings more accessible and effective for those nearing the end of their careers.
One of the most notable changes is the Secure 2.0 provision, allowing even greater catch-up contributions for workers between ages 60 and 63. While the standard catch-up contribution limit for those over 50 remains at $7,500, those within this age group can contribute an extra $11,250, raising their total potential deferral to $34,750. That’s about 14 percent higher than in 2024, giving older workers a substantial opportunity to accelerate their retirement savings as they approach retirement.
For workers who may feel behind on retirement planning, these adjustments offer a critical chance to catch up. By allowing higher contributions, the IRS’s new limits could help many older Americans get closer to their retirement goals. Read more about these retirement changes here.
While we are making changes, Congress really needs to pass the Greatest Generation Act. This legislation would greatly increase benefits for seniors 82 and up. Learn more here.