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When I was working, I saved the maximum to my 401(k) account. So, I always kept up with the plan’s savings limits. If you haven’t heard, there are higher savings limits for 401(k) plans in 2025, plus a new “super catch-up” category. And it’s still early enough in the year for salaried workers to take advantage of them.
Thanks to an inflation adjustment, the maximum regular contribution to a 401(k) plan has increased by $500 to $23,500 in 2025. Workers ages 50 to 59 or 64+ can save $7,500 more in “catch-up” contributions in 2025, or $31,000 total.
New in 2025 is the super catch-up category, allowing workers aged 60 to 63 to mount a savings charge before retiring. They can save $11,250 in catch-up contributions—or $34,750 total—to their 401(k) account this year.
Which brings me to the fly in the ointment. With savings limits this high, most workers don’t make enough to ring the top bell. In 2023, only 14% of workers contributed the maximum to their retirement plan, according to Vanguard’s How America Saves 2024, which analyzes the behaviors of some 5 million plan participants.
Here’s my low-stress saving suggestion. Don’t try to leap over the high bar in one go. Instead, if you’re working, raise your savings by 1% of your pay. I didn’t feel much difference in my take-home pay when I did. Then do it again next year, and so on. Maybe you‘ll hit the savings limit, or maybe you won’t. But you should be able to retire someday.
For many years, I got something like annual COLA raises and increased my retirement contributions accordingly. Implementing this did of course require some frugality.
Important to note that the “super” catch contributions for workers age 60 to 63 has to be adopted by your employer. If it’s not currently available by your employer, interested employees should lobby their HR department to get the feature added.
With regards to this feature likely not being something that most workers have the ability to take advantage of, one of the dirty little secrets of 401(k) plans is that they tend to be most advantageous to mostly highly compensated employees, who have the ability to take advantage of the highest savings limits. In most corporate 401(k) plans, 80% of plan assets are held by approximately 20% of company employees, usually the most highly compensated employees of the company.
As far as I know, as long as the ratios of employee contributions to compensation are relatively equal (something like not more than a 2x difference between highly-comped employees and non-highly-comped employees, for example) then it’s considered fair by the rules. But I completely agree 401k plans are a better deal the more money you make, and significantly worse deal than a pension if you’re middle or lower income. It wasn’t the most equitable solution, but really the point of the 401k was saving money for companies, wasn’t it?
My understanding of a key point in the law change is the employer must amend their 401(k) or other qualified plan to allow the super catch-up to be elected by the employee and doing so is optional for the plan sponsor. I have wondered if any employer other than large employers will adopt plan amendments to allow such catch up provisions for what appears to be a very limited group of employees.
If you want to nerd out here is a recent link to the provisions as published in the federal register.
https://www.federalregister.gov/documents/2025/01/13/2025-00350/catch-up-contributions