For the 15% of retirement savers who maxed their 401(k) last year, there’s good news — you’ll be able to save even more in 2025. Earlier this month, the IRS announced updates to 401(k) contribution limits for the 2025 tax year, along with new rules offering additional savings for older workers.

• The employee contribution limit will increase from $23K to $23.5K, reflecting a 2.1% cost-of-living adjustment.
• As in previous years, workers over age 50 can make an additional $7.5K in catch-up contributions — and for the first time, workers aged 60 to 63 can contribute up to $11.25K more.

Eye on IRAs: While 401(k)s offer expanded savings opportunities, many Americans continue to overlook another option — the Individual Retirement Account (IRA). According to the IRS, only 9.1% of Americans contributed to an IRA in tax year 2018. But for those motivated to save, IRAs allow contributions of up to $7K — or $8K for those eligible for catch-up contributions. Together, these options mean many Americans could save over $31K for retirement in 2025. Not bad at all.