Most of us are pretty stressed by the need to give our savings a big boost as we approach retirement. Guess what? There is actually a relatively little-known retirement savings strategy that can really help: Catch-up contributions.
Catch-up contributions are the IRS’s way of making it easier for savers age 50 and up to tuck away enough retirement savings. You probably already know that there’s a limit to how much you’re allowed to save in tax-advantaged retirement accounts such as IRAs and 401(k)s. Well, once you reach age 50, you’re allowed to make additional “catch-up” contributions over and above those annual contribution limits.
However, according to a Transamerica Center study, only 52% of workers know about catch-up contributions. It’s time to learn about this strategy and start applying it to your retirement planning.
2025 Contribution Limits for Retirement Savings Accounts
The contribution limits and annual catch-up contribution allowance vary depending on the type of retirement savings account you own. However, if you are 50 or over and have both an IRA and a 401k, you can save a whopping total of $39,000 in 2025 (double that if you are married and both qualify).
Catch-up 401(k) contributions:
For 2025, the 401(k) plan annual contribution limit is $23,500 while the catch-up contribution is $7,500. This means that if you are 50 or over, you can contribute a total of $31,000 into your 401(k) in 2025. (Your total contribution, including employer-matching funds, cannot exceed $70,000, or $77,500 if you are 50-plus. )
Between the ages of 60-63? Save even MORE! Under the SECURE 2.0 Act, individuals aged 60 to 63 are eligible for a higher catch-up contribution limit of $11,250 in 2025, allowing for a total contribution of $34,750.
Catch-up IRA contributions:
For 2025, the IRA annual contribution limit is $7,000. And, the catch-up IRA contribution is $1,000, allowing workers age 50 and over to contribute a total of $8,000 per year.
Note that the contribution limits for traditional IRAs and Roth IRAs overlap. In other words, if you are 50 or older, you can contribute a total of $8,000 per year, split however you want between traditional and Roth IRAs (assuming that you meet the income limits for contributing to a Roth account).
However, the limits between 401(k)s and IRAs do not overlap, so you can max out your contributions for both types of accounts in the same year.
Why Catch-Up Contributions Matter
According to a recent GOBankingRates survey, 29% of adults age 55 and up have no retirement savings whatsoever and another 15% have less than $10,000 saved.
However, don’t despair if you feel like you don’t have enough. Catch-up contributions can make a real difference.
If you’re behind on your retirement savings, maxing out both your annual contribution and your catch-up contribution may be enough to finance a secure and reasonably comfortable retirement.
The Potential Value of Catch-Up Contributions
Let’s say that you have just turned 50 and you have no retirement savings. However, turning 50 is a wake-up call for you, so you decide then and there to max out your retirement contributions to your 401(k) and Roth IRA.
For 2025, you could save a total of $39,000 per year into these two account. If you were able to save that much every year until you turned 60 and earned an average 6% return per year on that money, you’d end up with about $590,000 after 10 years.
How Do You Find the Money to Max Out Catch-Up Contributions?
Sure, it is easy to see how beneficial it is to save at least as much as the IRS recommends. However, actually finding the money to save can be the real challenge.
To save more for retirement, you don’t necessarily need to find new sources of income, you just have to rethink your existing spending. Explore 23 Big and Small Ways to Save More for Retirement.
BONUS: The Tax Savings of Catch-Up Contributions
Catch-up contributions don’t just help you save more for retirement; they also help you reduce your tax bill. When you save money in a traditional IRA or 401(k), you’re not required to pay taxes on those contributions. That means you’re able to save more money in these accounts without impacting how much money you have left for other expenses.
Saving money in a Roth account also gets you a tax break, but in a different way. With Roth accounts, you don’t get a deduction on the money you contribute to the account, but when you take money out of the account you don’t have to pay taxes on it. If your retirement income is limited, being able to reduce your tax bill at that time may make a significant difference in your standard of living.
Reducing your taxable income in retirement may have other benefits than simply stretching your retirement income a bit further. For example, Social Security benefits become taxable if one half of your Social Security benefits plus your other taxable income exceeds certain limits. Since distributions from Roth IRAs are not taxable income, they don’t count towards this calculation. As a result, putting your annual IRA contribution into a Roth account may result in an even better tax deal than putting that money into a traditional IRA.
Use the Boldin Retirement Planner to dig into your retirement tax situation. Run “what if” scenarios for saving into Roth or traditional accounts and compare future outcomes.
How Much Do YOU Need for a Comfortable Retirement?
If you’re behind on saving for retirement, it’s even more important to have a good retirement savings plan and investment plan for that money.
Saving every month is hard. But it is harder when you don’t actually know if you are saving too little or too much.
You might want to start by figuring out how much YOU will need for YOUR retirement. (Don’t rely on averages that may or may not apply to you and your values and goals.) The Boldin Retirement Planner is the most detailed tool available online.
It is easy to use, but is designed to help you imagine your future and take the steps you need to take to make that future happy and secure.
Updated April 24, 2025