Big retirement rule changes are coming in 2025 — here’s how you can save more money

Starting in 2025, investors age 60 to 63 can make catch-up contributions of up to $11,250 on top of the $23,500 deferral limit. Combined, these workers can defer a total of $34,750 for 2025, which is about 14% higher than 2024.

“This can be a great way for people to boost their retirement savings,” certified financial planner Jamie Bosse, senior advisor at CGN Advisors in Manhattan, Kansas, previously told CNBC.

Roughly 4 in 10 American workers are behind in retirement planning and savings, primarily due to debt, insufficient income and getting a late start, according to a CNBC survey, which polled roughly 6,700 adults in early August.

For 2025, the “defined contribution” limit for 401(k) plans, which includes employee deferrals, company matches, profit-sharing and other deposits, will increase to $70,000, up from $69,000 in 2024, according to the IRS.

The 401(k) catch-up contribution change is “very good” for older workers who want to save more for retirement, said Dave Stinnett, Vanguard’s head of strategic retirement consulting.

Some 35% of baby boomers feel “significantly behind” in retirement savings, according to a Bankrate survey that polled roughly 2,450 U.S. adults in August.

“But not everyone age 50 or older is maxing out [401(k) plans] already,” Stinnett said.

Only 14% of employees deferred the maximum amount into 401(k) plans in 2023, according to Vanguard’s 2024 How America Saves report, based on data from 1,500 qualified plans and nearly 5 million participants.

The same report found an estimated 15% of workers made catch-up contributions in 2023.

Deferral rates for 401(k) plans typically increase with income and age, Vanguard found. Participants under age 25 saved an average of 5.4% of earnings, while workers ages 55 to 64 deferred 8.9%.