If you’re age 50 or older, you have a unique opportunity to strengthen your retirement savings through additional “catch-up” contributions to your tax-favored retirement accounts. These extra contributions can make a bigger impact on your long-term financial security than many people realize.

IRA Contribution Limits
For 2025, eligible taxpayers can contribute up to the lesser of $7,000 or 100% of earned income to a traditional or Roth IRA. Individuals age 50 or older can make an additional $1,000 catch-up contribution for the year, bringing their total to $8,000. The deadline to make this contribution for the 2025 tax year is April 15, 2026.

Catch-up contributions to a traditional IRA can provide an immediate tax deduction, though the deduction may be limited if you or your spouse are covered by a workplace retirement plan and your income exceeds certain thresholds.

Contributions to a Roth IRA do not provide upfront tax savings but allow for tax-free qualified withdrawals after age 59½. Income limits apply, but higher-income individuals may still benefit from making nondeductible traditional IRA contributions to take advantage of tax-deferred growth.

Employer Plan Contribution Limits
For 2025, employees can contribute up to $23,500 to an employer-sponsored plan such as a 401(k), 403(b), or 457. If you’re age 50 or older and your plan allows it, you can contribute an additional $7,500, bringing your total contribution limit to $31,000.

Contributions reduce your taxable income, effectively creating an immediate tax benefit. You can use the savings from that tax deduction to fund additional contributions or invest elsewhere to further build retirement wealth.

How Catch-Up Contributions Grow
The real power of catch-up contributions comes from compound growth over time. Here are a few examples:

• Example 1: If you contribute an extra $1,000 to your IRA each year from age 50 to 65, you could accumulate between $22,000 (at a 4% return) and $30,000 (at an 8% return).
• Example 2: If you contribute an extra $7,500 annually to your employer plan for 15 years, you could add between $164,000 and $227,000 to your balance.
• Example 3: If you make both the IRA and employer plan catch-up contributions for 15 years, your combined additional savings could reach $186,000 to $258,000, depending on returns.

The Bottom Line
Catch-up contributions offer one of the simplest and most effective ways to grow your retirement nest egg, especially in the final stretch of your career. If both you and your spouse are eligible, the long-term benefits can multiply even further.

Our team can help you determine the best way to maximize your retirement contributions and align them with your broader tax and investment strategy. Contact us to see how these opportunities can help strengthen your financial future.