In light of improving retirement savings, it’s crucial to optimize your 401(k) plan, especially with significant changes anticipated in 2025. A recent CNBC survey indicated that 40% of Americans are lagging in their retirement savings. Before making adjustments, assess your financial situation, including income and immediate needs. Starting in 2025, employees can contribute $23,500 to their 401(k), up from $23,000, while those aged 50 and older can continue to make a $7,500 catch-up contribution. This increase, along with the new “super max catch-up” option for individuals aged 60 to 63, who can increase contributions to $34,750, presents an opportunity for everyone to save more.
However, it’s important to ensure your 401(k) plan allows these higher contributions to avoid tax complications. Additionally, some employees might forfeit employer match contributions if they max out contributions early in the year, unless their plan includes a “true-up” feature that compensates for missed matching. As of 2023, 67.4% of plans offered true-up matching. Consulting your employer on these features could enhance your retirement savings strategy in 2025 and beyond.
