Many Americans are grappling with a retirement savings gap, but starting in 2025, saving more may become more accessible for older workers.

The Secure Act 2.0, passed by Congress in 2022, introduced several enhancements to the retirement system, including updates to 401(k) plans, required minimum distributions, and 529 college savings plans. While some of these changes have already been implemented, CNBC reports that a significant “max savers” update will take effect in 2025.   

A recent CNBC survey found that about 4 in 10 American workers are falling behind in their retirement planning and savings, based on a poll of around 6,700 adults conducted in early August.

However, upcoming changes to 401(k) catch-up contributions, which will raise the limit for workers aged 50 and older, could boost certain savers, according to experts. Here’s what you need to know.

Higher 401(k) Catch-Up Contributions

In 2024, employees can defer up to $23,000 into their 401(k) plans, with an additional $7,500 available for workers aged 50 and older. However, starting in 2025, workers aged 60 to 63 can significantly increase their annual 401(k) catch-up contributions to either $10,000 or 150% of the catch-up limit, whichever is greater. The IRS has not yet announced the specific catch-up limit for 2025, but this change offers a valuable opportunity for people to boost their retirement savings.

According to Vanguard’s 2024 How America Saves report, 15% of eligible workers made catch-up contributions in 2023, with higher earners making up the majority. Even among high-income participants—those earning over $150,000 or with account balances exceeding $250,000.       

Roth Catch-Up Contributions

A fundamental Secure 2.0 change will require higher earners to make catch-up contributions to Roth accounts, removing the upfront tax break. This rule applies to catch-up contributions in 401(k), 403(b), or 457(b) plans for those earning more than $145,000 from a single employer in the previous year. The threshold will adjust annually for inflation.

However, the IRS has delayed the implementation of this rule until January 2026. This gives workers until the end of 2025 to continue making pre-tax 401(k) catch-up contributions, regardless of their income. 

Conclusion

Older Americans looking to boost retirement savings get a new opportunity in 2025

The 2022 Secure Act 2.0 aims to help Americans save more for retirement through enhanced 401(k) contributions. Under the new law, workers aged 60-63 can make more significant “catch-up” contributions starting in 2025. These workers can contribute either $10,000 more annually or 150% of the standard catch-up amount, whichever is higher.