The Secure 2.0 Act brings a new opportunity for older workers to increase their retirement savings starting in 2025.
The “super” catch-up contribution aims to help those aged 60 to 63 bolster their retirement accounts during their final working years. Here are five key facts about this new rule and what it means for late savers.
1. The Super Catch-Up Contribution Increases Your Savings Limit
Under the new rule, workers aged 60 to 63 can make an additional $11,250 in catch-up contributions to their 401(k) or similar workplace retirement plans. Combined with the 2025 general deferral limit of $23,500, eligible workers could save up to $34,750 annually.
This enhanced contribution provides a significant boost for those who are nearing retirement and looking to catch up on savings.
Pro tip: If you have over $150,000 in savings, consider talking to a professional financial advisor. Zoe Financial is a free service that will match you with a pro in your area.
2. Eligibility Is Limited to Ages 60 Through 63
The super catch-up provision applies specifically to individuals aged 60, 61, 62, or 63 during the calendar year. Once workers turn 64, they are no longer eligible for the enhanced contribution and must revert to the standard catch-up limit for those aged 50 and older.
This targeted age range addresses the critical years before retirement when savers often need to maximize their contributions.
3. Many Workers May Struggle to Afford It
According to an analysis by the Economic Policy Institute, the typical household headed by individuals aged 55 to 64 has just $10,000 saved in a retirement account.
This stark reality highlights the financial challenges many Americans face as they near retirement, making it difficult for most to take full advantage of the new super catch-up contributions.
4. High Earners Will Benefit the Most
Workers with higher incomes are far more likely to use catch-up contributions compared to the general population. Vanguard research shows that over half of those earning $150,000 or more maximize these contributions, while only a tiny percentage of all retirement savers do the same.
This disparity highlights that while the super catch-up rule provides significant opportunities, its benefits are often out of reach for lower-income workers.
Pro-tip: With an annuity, pre-tax money you contribute grows tax-deferred, and you won’t owe taxes until you withdraw it. With a Gainbridge® SteadyPace™ annuity, you can lock in a guaranteed 5.50% APY. (Subject to change without notice.)
5. Employers Aren’t Required to Offer This Option
Although nearly all employers currently offer standard catch-up contributions, they aren’t required to implement the super catch-up provision. Employers must update their retirement plan structures to accommodate the new rules, which may take time.
Most large plan providers anticipate widespread adoption of the enhanced contribution option. However, workers should confirm whether this feature will be available with their employers.
Supercharge Your Retirement Savings
The new super catch-up contribution is a powerful tool for eligible workers to enhance their retirement savings. While the higher limits allow many to make up for lost time, affordability remains challenging.
If you’re nearing retirement, talk to your employer or financial advisor to explore whether the super catch-up rule can help you meet your financial goals.
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