Retirement savers in their early 60s have a chance to turbocharge their 401(k) contributions starting in 2025.

Workers aged 60-63 can contribute an extra $11,250 to their 401(k) each year through a new increased catch-up provision. This is a significant jump from the current catch-up limit of $7,500 available to employees 50 and older.¹

The IRS is raising the general 401(k) deferral limit to $23,500 for 2025, up from $23,000 in 2024.¹ Catch-up contributions are in addition to the general limit. People who qualify for the newly announced catch-up contribution can invest a maximum of $34,750 into their 401(k) for the year.

This change, part of the Secure 2.0 Act, aims to help older workers boost their retirement savings. The Act has already changed the retirement landscape around automatic employee enrollment in workplace savings plans and bumped up the age for required minimum distributions.

Staying on track for retirement

Americans believe they need $1,058,547, on average, saved for retirement, according to Empower research. People in their 60s look to be on pace right now: That segment had an average retirement savings of $1,197,814 in total retirement accounts as of October 2024, based on Empower Personal Dashboard^TM data.²

This larger catch-up opportunity could be a useful tool for those approaching the age criteria: The average retirement savings for adults in their 50s was below $1 million in October 2024, at $981,189.

Increasing retirement savings

While most Americans (70%) contribute to retirement plans, according to an Empower study, many may not be maximizing their savings potential. For those in their 60s looking to catch up, the new catch-up contribution rule offers a significant opportunity. 

Here are some ways to help make the most of it: 

• Maximize your 401(k): Contribute as much as possible, particularly if an employer offers matching contributions. The supersized catch-up contribution can help with the power of compounding. Savers in their 60s have an average 401(k) balance of $571,807, according to Empower Personal DashboardTM data.3
• Diversify with an IRA: In addition to a 401(k), workers can contribute to an IRA as long as they remain within the respective IRS limits to help prevent penalties at tax time. While the IRA contribution limit remains at $7,000 for 2025, plus a catch-up allotment of $1,000 for those 50 and older, it provides another way to potentially grow retirement savings.
• Review investment mix: Deciding what percentage to contribute to a 401(k) provides a chance to check where funds are being allocated and to consider new investment options. A look at the average portfolio mix by age can give insight to investors across the decades.

On the road to retirement

Empower research found that nearly 2 in 5 Americans (37%) planned to put more money into employer-sponsored retirement plans in 2024, and the new catch-up rule could help those in their 60s carry the habit through 2025 as well. 

Taking time now to log into retirement accounts and review current contribution rates could be useful for many investors – and particularly for those who would be eligible for this extra opportunity in 2025 and beyond.