In 2025, significant modifications to retirement rules will be implemented. Here are some strategies to help you save more money.

• In 2025, the 401(k) employee deferral limit will increase to $23,500 from $23,000 in 2024.
• Secure 2.0 allows investors aged 60 to 63 to save more, while catch-up contributions for workers aged 50 and older remain at $7,500.
• In 2025, the catch-up contribution for workers aged 60 to 63 will increase to $11,250, allowing them to defer a total of $34,750, which is approximately 14% higher than the previous year.

While many Americans are not adequately prepared for retirement, a modification to 401(k) plans could benefit older workers.

In November, the IRS announced an increase in 401(k) contribution limits for 2025, with employee deferrals rising to $23,500 from $23,000 in the previous year.

Secure 2.0 allows workers aged 60 to 63 to save more than the $7,500 catch-up contribution for investors aged 50 and older.

In 2025, workers aged 60 to 63 can make additional contributions of up to $11,250 on top of the $23,500 deferral limit, resulting in a total deferral of $34,750, which is approximately 14% higher than 2024.

According to certified financial planner Jamie Bosse, senior advisor at CGN Advisors in Manhattan, Kansas, this can be an excellent way for individuals to increase their retirement savings.

A CNBC survey of about 6,700 adults in early August found that roughly 4 out of 10 American workers are not adequately prepared for retirement due to debt, low income, and starting late with savings.

In 2025, the "defined contribution" limit for 401(k) plans, including employee deferrals, company matches, profit sharing, and other deposits, will rise to $70,000 from $69,000 in 2024, as per the IRS.

How much older workers save for retirement

Vanguard's head of strategic retirement consulting, Dave Stinnett, stated that the change in 401(k) catch-up contribution is "excellent" for older workers looking to save more for their retirement.

A Bankrate survey of about 2,450 U.S. adults in August found that around 35% of baby boomers feel "significantly behind" in their retirement savings.

Not all individuals over the age of 50 have fully utilized their 401(k) plans, according to Stinnett.

In 2023, only 14% of employees deferred the maximum amount into 401(k) plans, according to Vanguard's 2024 How America Saves report, which analyzed data from 1,500 qualified plans and nearly 5 million participants.

In 2023, approximately 15% of workers made catch-up contributions, according to the same report.

On average, 401(k) plan deferral rates rise with income and age, Vanguard discovered. Individuals under 25 saved 5.4% of their earnings, while those aged 55 to 64 deferred 8.9%.