New regulations for 2025 increase catch-up contribution limits for retirement savings, particularly for those aged 60 to 63. Financial advisors emphasize the importance of maximizing contributions and investing aggressively for long-term retirement goals.
More than half of American workers feel they are behind on retirement savings , according to a Bankrate survey that polled 2,445 U.S. adults in August. For 2025, employees can defer $23,500 into 401(k) plans, plus an extra $7,500 for those age 50 and older. But the catch-up contribution limit rises to $11,250 for those age 60 to 63 in 2025, thanks to a change from Secure 2.0 . Financial advisors offer important tips for managing your money in 2025 catch-up contributions .
Typically, it takes a couple of paychecks for 401(k) deferral changes to go into effect, according to Boston-area certified financial planner Catherine Valega, founder of Green Bee Advisory. can be easier earlier in the year because the higher percentage is spread across more paychecks. 'Be aggressive with your investments, especially if you have decades until retirement,' said Valega, who urges clients to max out their 401(k) plans if possible. Starting in 2025, there's also a special catch-up limit for investors age 60 to 63, thanks to a change enacted via. Instead of $7,500, this group can save $11,250 for catch-up contributions, which brings their total deferral limit to $34,750 for 2025. In 2023, according to a 2024 Vanguard report, based on data from 1,500 qualified plans and nearly 5 million participants. Ultimately, you should defer 'as much as you feel comfortable' not tapping until retirement, said CFP George Gagliardi, founder of Coromandel Wealth Strategies in Lexington, Massachusetts. Otherwise, you could owe a 10% penalty and taxes for early withdrawals, with some exceptions. Typically, experts recommend a minimum of three to six months of expenses for an emergency fund, depending on your family's circumstances
Retirement Savings 401(K) Catch-Up Contributions Secure 2.0 Financial Planning
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