How to make the most of “catch up” retirement contributions.
Key takeaways:
- Catch-up contributions let you save more after age 50 in retirement accounts like 401(k)s, IRAs, and HSAs.
- Start with your employer plan to take advantage of free matching dollars, then consider IRAs or SEP IRAs if you’re self-employed.
- The sooner you start, the more you benefit: compound interest rewards early and consistent savers.
If you’re wondering whether you’re on track with your retirement savings or you haven’t started saving yet, you’re not alone. According to the Federal Reserve, 28% of non-retirees have no retirement savings opens in a new window, and only 31% of non-retirees think that their retirement savings are on track opens in a new window.
The good news is that there are plenty of ways to catch up using tax-advantaged “catch up” contributions to IRAs, 401(k)s, and even HSAs, depending on your age.
What are retirement catch-up contributions?
The U.S. tax code now includes “catch-up contributions” to help people 50 and older save extra money in their retirement accounts. For example, while younger workers can put up to $23,500 into a 401(k), those 50 and up can contribute an extra $7,500, for a total of $31,000 in annual contributions.
Are there limits to catch up contributions?
Yes, there are. 2025 catch up opportunities for the most common retirement accounts are below, and they can change annually so it’s important to check the IRS website opens in a new window for up-to-date figures.
| Savings Account Type | Max Contribution Under 50 | Age Catch-Up Kicks In | Additional Catch-Up Contribution |
|---|---|---|---|
| Traditional and Roth IRAs | $7,000 | 50 | $1,000 |
| 401(k), Roth 401(k), 403(b) or similar plan* | $23,500 | 50/60 | $7,500/$11,250** |
| Health Savings Account (HSA) | $4,300 individual; $8,550 family | 55 | $1,000 |
*Starting in 2026, individuals over 50 who earned more than $145,000 in the preceding year must make all catch-up contributions to a Roth account in after-tax dollars.
**Starting in 2025, the SECURE 2.0 Act lets people aged 60 to 63 put an extra $11,250 into their 401(k). This “super catch-up” contribution helps those nearing retirement save more.
How can I maximize contributions in 2025?
- Start with employer retirement programs: If you have a retirement plan offered through your work, start there, as many employers match employee contributions. The most common employer match is 50% on the first 6% of your salary, meaning that if your salary is $100,000, your employer will match your contribution up to $3,000 as long as you’re saving at least $6,000 a year. Think of this as free money you earn simply by contributing.
- Consider IRAs: If you’re able to max out your 401(k) savings, consider also contributing to an IRA. An IRA (Individual Retirement Account) is a tax-deferred or tax-free (depending on the type) savings account that helps you set aside money for retirement.
- Self-employed & gig workers can still save: If you’re a small business owner, self-employed or a gig worker, consider contributing to a SEP IRA (Simplified Employee Pension Individual Retirement Account). A SEP IRA lets you save for retirement with higher contribution limits than a regular IRA, and it’s easy to set up and manage.
- Use HSAs for savings: If your employer offers a Health Savings Account or HSA, you can think of the funds saved there as getting a triple tax break: you don’t pay taxes when you put the money in, you don’t pay taxes when it grows, and you don’t pay taxes when you spend it on qualified medical costs. You may consider paying for current medical expenses out of pocket now to maximize the savings opportunity for the future.
- Automate your savings: Set your plans to automatically increase contributions over time to ensure you’re maximizing your benefits.
When should I start?
Because of how compound interest works, the dollars you save when you’re younger have the most time to make an impact. So the sooner you start saving, the more your savings will grow. A good rule of thumb is to save at least 15% of what you make each year for retirement.
In other words, the best time to start or increase saving is today!
If you’re still worried, consider this: research organization Gallup has found that Americans consistently underestimate how well retirement will turn out opens in a new window. So put those worries to rest, save as much as you can, and look forward to those savings working for you when you’re older.
If you have questions about how to get started, reach out to your employer’s retirement savings manager if you have one, or reach out to your Commerce Banker to develop a plan that works best for you.
Disclosures:
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