Most of us are underscored considerably in the need to boost our savings significantly as we approach retirement. guess what? In reality, there are relatively little known retirement savings strategies.
Catch-up contributions are the IRS’ way to eliminate adequate retirement savings for savers under the age of 50. You probably already know that there are limits to the allowance of savings in tax retirement accounts such as IRAS and 401(k). Now, once you reach 50, you can go beyond these annual contribution limits and make an additional “catch-up” contribution.
However, according to the Transamerica Center studyonly 52% of workers know about the contribution of catch-up. It’s time to learn about this strategy and start applying it to your retirement plan.
2025 Retirement Savings Account Contribution Limitations
Contribution restrictions and annual catch-up contribution allowances vary depending on the type of retirement savings account you own. However, if you’re over 50 and have both an IRA and a 401K, you can save a whopping $39,000 in 2025 (double if you’re married and qualify).
Catchup 401(k) contribution:
In 2025, the 401(k) plan has an annual contribution limit of $23,500 and a catch-up contribution of $7,500. This means that if you are over 50 years old, you can contribute a total of $31,000 to 401(k) in 2025 (total contributions, including employer matching funds, cannot exceed $70,000.
Between 60 and 63 years old? Please save more! In the Secure 2.0 Act, individuals aged 60-63 will be able to contribute a total of $34,750 due to a higher catch-up contribution limit of $11,250 in 2025.
Catch-up IRA contributions:
The annual IRA contribution limit for 2025 is $7,000. Additionally, the Catch-Up IRA’s contribution is $1,000, allowing workers over 50 to contribute a total of $8,000 a year.
Please note that the contribution limits of traditional IRAs and Roth IRAs overlap. In other words, if you are over 50, you can donate a total of $8,000 in the required split between your traditional IRA and Roth IRA (assuming you meet the income limit to contribute to your Roth account).
However, there will be restrictions between 401(k)s and IRAs do not have Because of overlap, you can make the most of the contributions of both types of accounts in the same year.
Why catch-up contributions are important
According to the recent GobanKingrates Survey29% of adults over the age of 55 have no retirement savings, and an additional 15% have no savings of less than $10,000.
But don’t despair if you feel that you’re not enough. The contribution of catch-up can make a real difference.
If you are late in your retirement savings, making the most of both your annual contribution and catch-up contribution may be enough to fund a safe and reasonably comfortable retirement.
The potential value of catch-up contribution
Let’s say you’re just 50 years old and have no retirement savings. However, turning 50 is a wake-up call for you. Therefore, we decide to make the most of our contributions from our 401(k) and Roth IRA retirement.
In 2025, you can save a total of $39,000 a year on these two accounts. If you could save a lot every year until you turn 60 and earn an average annual return of 6% on that money, you’ll end up with about $590,000 Ten years later.
How do you find the money to make the most of your catch-up contribution?
Of course, it’s easy to see how beneficial it is to at least save as much as the IRS recommends. But finding money to actually save is a real challenge.
To save more money for retirement, you don’t necessarily need to find a new source of income. You need to rethink your existing spending. Explore 23 big and small ways to save more for retirement.
Bonus: Tax savings for catch-up contributions
The contribution of catch-ups will not only help you save more for retirement. It also helps to reduce taxes. If you want to save money with a traditional IRA or 401(k), you don’t have to pay taxes on those contributions. This means you can save more money on these accounts without affecting the amount you’ve left for other expenses.
Saving money with a Roth account can also be a tax deduction, but it is another way. With a Roth account, there is no deduction for money to donate to your account, but if you take money from your account, you don’t have to pay taxes. If you have limited retirement benefits, being able to cut taxes at that point can make a huge difference in your standard of living.
Reducing taxable income at retirement may bring other benefits besides simply increasing your retirement income a little more. For example, if you exceed half of your Social Security benefits and half of your other taxable income, your Social Security benefits will be taxable. Specific restrictions. Distributions from the Ross IRA are not taxable income and therefore are not counted in this calculation. As a result, putting your annual IRA contribution into your loss account could lead to even better tax transactions than putting that money into a traditional IRA.
Use the Boldin Retirement Planner to dig into your retirement tax situation. Run “what if” scenarios to save to losses or traditional accounts and compare future results.
How much do you need to retire comfortably?
If you are behind in saving for retirement, it is even more important to have a good retirement savings plan and investment plan for that money.
It’s difficult to save money every month. But it’s difficult when you actually don’t know if you’re too little or too much.
You might want to start by understanding how much you need to retire. (Don’t rely on the average that may or may not apply to you and your values and goals.) Boldin Retirement Planner is the most detailed tool available online.
It’s easy to use, but is designed to help you imagine your future and take the necessary steps to make that future happy and safe.
Updated April 24, 2025
