New Retirement Savings Limits for Pre-Retirees

Matthew Allgood |

At Allgood Financial, we firmly believe that your financial security is our business. For many pre-retirees, especially those in their 50s and early 60s, recent changes to retirement account contribution limits provide a powerful opportunity to boost savings. If you’ve been waiting for the right moment to supercharge your nest egg, now is that moment. 

What’s Changing and Why It Matters 

Thanks to a combination of inflation adjustments and provisions in the SECURE 2.0 Act, the IRS recently announced increased contribution limits for 2026, affecting 401(k), 403(b), 457 plans, and IRAs. These higher limits give pre-retirees more room to save tax-advantaged dollars, especially in the critical years leading up to retirement. 

Here are the key updates as laid out by the IRS: 

  • Employee deferral limit for 401(k), 403(b), 457 plans:
    • In 2026, you can contribute up to $24,500, up from $23,500 in 2025.
  • Catch-up contributions for age 50+:
    • General catch-up (age 50–59, and 64+): increases to $8,000 (was $7,500). 
    • “Super” catch-up (age 60–63): remains at $11,250, under a special rule in SECURE 2.0. (CNBC)
  • IRA contribution limit:
    • Base limit climbs from $7,000 to $7,500.
    • IRA catch-up (50+) rises to $1,100. 

Why Pre-Retirees Should Pay Attention 

If you're in your 50s or early 60s, you’re in a sweet spot: 

  1. Maximizing capacity during peak income years: Many people in their 50s and early 60s are earning their highest salaries. With higher contribution limits, you can funnel more of that income into retirement accounts, reducing current taxable income while building up your savings.
  2. Taking advantage of the super catch-up window (60–63): For those aged 60 to 63, the SECURE 2.0 law gives you a bigger catch-up opportunity than in years past: an extra $11,250/year on top of base contributions, if your plan allows. That sums to a combined limit of $34,750 in 2025 (and similar in 2026 if your plan adopts the provision). 

That enhanced limit recognizes that many people’s savings efforts accelerate in their 60s and helps you make up ground if you started late. 

  1. Growing tax-advantaged retirement balances: By increasing contributions, you give your funds more time to compound tax-deferred (or, in the case of Roth, tax-free). This can significantly improve your retirement cushion, especially important for those planning to retire in the next 5–10 years.
  2. Planning for long-term security: A larger retirement balance reduces the risk of outliving your savings. It also gives you more flexibility for legacy planning, something we at Allgood Financial care deeply about, because we know that planning is about more than just you; it's about the generations that follow. 

Things to Keep in Mind (Especially in Tennessee) 

Employer plan design matters 

Not every employer’s retirement plan may immediately support the "super" catch-up increase. Check with your HR or plan administrator to confirm that your plan allows the enhanced contributions. The SECURE 2.0 provision is optional for plan sponsors. 

Roth vs. pre-tax catch-up contributions 

Starting in 2026, there are important tax designations to know: if you make catch-up contributions and meet certain income thresholds, those may need to be made as Roth (after-tax) contributions. 

Overall defined contribution limit 

Remember: for defined contribution plans (like 401(k) plus employer match), there’s a total cap. While your personal contributions (including catch-up) are increasing, the total annual addition limit (employer + employee) must also be considered. 

State-specific planning 

For our clients in Tennessee and the greater Nashville area: because Tennessee has no state income tax on wage income, the tax implications of pre-tax vs. Roth contributions may look different than in high-income-tax states. Whatever strategy you choose, run the numbers with your financial advisor: we’re here to help. 

What Should You Do Next? 

  1. Review your current contribution rate. How much are you deferring now? With the higher limits, is there room to increase?
  2. Talk with your HR or plan administrator. Confirm whether your retirement plan supports the enhanced 60–63 catch-up and whether Roth catch-up contributions are required or optional.
  3. Model the tax impact. Work with your Allgood Financial advisor to run a projections exercise. We can compare pre-tax contributions vs. Roth catch-up to see what makes sense for your retirement goals and your tax situation.
  4. Adjust as your plan sponsor updates systems. These rule changes are relatively new, and some employers may still be updating payroll or plan administration to accommodate them. Stay in touch.
  5. Stay engaged in your comprehensive financial plan. Increasing your retirement savings is a powerful move, but it should connect to other goals: legacy planning, tax-efficient withdrawals, health care in retirement, and more. 

Final Thoughts 

If you're in your 50s or early 60s, the new retirement savings limits represent a real opportunity. With the SECURE 2.0 enhancements, you may be able to put away significantly more in your 401(k) or similar plan, especially during a window in your 60s when you might have a higher income and a stronger capacity to save. 

At Allgood Financial, we’re committed to helping you do all good things—not just today, but for the rest of your life and for future generations. How you save now shapes your legacy later. Let’s work together to make every dollar count.