Retirement Savings in 2025: Here’s What’s Changing
A Special Boost for Soon-to-Be Retirees
If you’re in your early 60s, here’s something to get excited about: 2025 introduces what we’re calling “super” catch-up contributions. Think of it as a turbo boost for your retirement savings.
Here’s how the numbers break down:
- If you’re under 50: You can put away up to $23,500
- If you’re 50-59 or over 64: You can save up to $31,000
- If you’re 60-63: You get the biggest opportunity – up to $34,750
The best part? You don’t even have to wait for your actual 60th birthday to take advantage of this. If you’ll turn 60 anytime in 2025, you can start making these larger contributions right from January 1st.
What About IRAs? They’re Getting a Refresh Too
While workplace retirement plans are seeing big changes, IRAs are holding steady with some important updates. You can still put in $7,000 for 2025, and if you’re 50 or older, you get to add another $1,000 on top of that.
However, your ability to contribute or deduct contributions might depend on your income. Here’s a simplified look at the new limits:
For Traditional IRAs
If you have a workplace retirement plan, you can take a full deduction if your income falls below:
- $77,000 for single filers
- $126,000 for married couples filing jointly
For Roth IRAs
You can make a full contribution if you earn less than:
- $150,000 if you’re single
- $236,000 if you’re married filing jointly
Making Smart Choices for Your Future
One question we hear a lot is whether to go with traditional or Roth contributions. While there’s no one-size-fits-all answer, here are some things to think about:
- Do you have all your retirement eggs in one basket? If most of your savings are in traditional pre-tax accounts, adding some Roth contributions could give you more flexibility in retirement.
- Are you wondering about future tax rates? While none of us has a crystal ball, having both types of accounts gives you options no matter what tax rates do in the future.
- Did you know you’ll have until age 75 before required distributions kick in? That’s thanks to new rules taking effect in 2033, giving your money more time to grow.
- Do you have all your retirement eggs in one basket? If most of your savings are in traditional pre-tax accounts, adding some Roth contributions could give you more flexibility in retirement.
More Ways To Save
Maxing out your workplace plan? That’s fantastic! But don’t stop there. Consider these additional options:
- Health Savings Accounts (HSAs): These offer triple tax advantages if you have a qualifying health plan. Think of them as a retirement account with a healthcare bonus.
- Health Savings Accounts (HSAs): These offer triple tax advantages if you have a qualifying health plan. Think of them as a retirement account with a healthcare bonus.
- After-tax 401(k) contributions: Some workplace plans let you add even more after you hit your regular limits.
- After-tax 401(k) contributions: Some workplace plans let you add even more after you hit your regular limits.
- Regular investment accounts: While they don’t come with special tax treatment, they offer flexibility that retirement accounts don’t.
Time for a fresh look at your Retirement Strategy
With all these changes coming in 2025, now is the perfect time to make sure your retirement strategy is taking advantage of every opportunity. The team at Columbus Street Financial specializes in helping people just like you navigate these changes and make the most of their retirement savings.
Don’t leave money on the table or miss out on these new opportunities. Contact Columbus Street Financial Planning today to schedule your retirement strategy review. We’ll help you understand exactly how these changes affect your situation and make sure you’re on track to meet your retirement goals.
Remember, taking full advantage of these new limits isn’t just about having more money in your accounts – it’s about having more confidence in your retirement future. Let’s work together to make that happen.
Important Disclosure: All Content is information of a general nature and does not address the circumstances of any particular individual or entity. This Content is for informational purposes only; you should not construe any such information or other material as legal, tax, investment, financial, or other advice as a specific recommendation or specific endorsement by Columbus Street. The information in this document is provided in good faith without any warranty and is intended for the recipient’s background information only. Columbus Street accepts no responsibility for loss arising from the use of the information contained herein. In exchange for using this Content, you agree not to hold Columbus Street liable for any possible claim for damages arising from any decision you make based on information or other Content made available to you. You alone assume the sole responsibility of evaluating the merits and risks associated with using any information or other Content provided by Columbus Street before making any decisions based on such information or other Content. You should consult with your tax advisor and financial professional before making any determination as to the appropriateness of any planning strategy indicated herein.