Maximizing your retirement account contributions: A comprehensive guide for the nearly-retired

The first day of retirement can feel like a finish line and starting line at the same time. As that checkered flag approaches, there are important moves you can make to support your financial strength. By being proactive and precise about your account contributions in the last few years before retirement, you can greatly enhance your financial security and enjoy a comfortable lifestyle throughout your golden years. 

In this guide, we’ll take a look at some strategies that can help your carefully planned retirement fund go even further. 

Understanding contribution limits and opportunities 

The first step to winning is knowing the rules of the game. In this case, that means knowing how much you can contribute to a retirement account in a year. 

The IRS sets limits on the amount you can contribute to your retirement accounts, like 401(k)s, IRAs, and Roth IRAs. These limits increase annually, to keep up with the rising cost of living. That means you need to keep your head in the game: if you “set and forget” your contributions years ago, you’re not putting away as much as you could be today. Staying informed about these limits is crucial for effective retirement planning. 

Here are the IRS’s retirement contribution limits for 2025: 

• 401(k) plans: For 2025, the contribution limit for 401(k) plans is $23,500, with an additional catch-up contribution of $7,500 for individuals aged 50 and older. Notably, starting in 2025, individuals aged 60 to 63 can make a “super catch-up” contribution of up to $11,250, allowing for a total contribution of $34,750. 

• Individual Retirement Accounts (IRAs): The contribution limit for IRAs in 2025 remains at $7,000, with a $1,000 catch-up contribution for those aged 50 and over.

• Roth IRAs: Contribution limits for Roth IRAs are the same as traditional IRAs; however, eligibility to contribute is subject to income limits. It’s important to note that Roth IRAs offer tax-free withdrawals in retirement, making them an attractive option for many retirees.

Tactics and techniques to save more 

It’s natural to wonder if you’ve saved enough for a successful retirement. Many of our clients have been methodical, disciplined savers all their lives — but the question still lingers. Even if you feel comfortable with your account balance as retirement nears, or if you still have decades to go, it’s rarely a bad idea to save more. 

Here are a few practices we often advise to supplement your savings: 

1. Catch up with enhanced contributions: If you’re 50 or older, use catch-up contributions to boost your retirement savings. The enhanced limits for those aged 60 to 63, effective in 2025, provide an additional opportunity to increase your 401(k) savings. 
2. Consider after-tax contributions: Some employer-sponsored plans allow for after-tax contributions beyond the standard limits. Often called the “mega backdoor Roth,” this strategy enables you to shift those additional contributions into a Roth IRA. You pay taxes on the income at your current tax rate, but growth and withdrawals are tax-free. Your financial advisor can help you understand if this is the right move for your situation.
3. Diversify retirement accounts: Contributing to a mix of traditional and Roth accounts can provide tax flexibility in retirement. Traditional accounts offer tax-deferred growth, while Roth accounts provide tax-free withdrawals, allowing you to manage your taxable income strategically. 
4. Automate contributions: Setting up automatic contributions ensures consistent savings and reduces the temptation to spend disposable income. It’s cliché, but for good reason: Regular contributions, even small ones, can grow significantly over time due to compound interest. 
5. Review and adjust contributions annually: Keep track of your contribution levels and how they compare to annual limit adjustments. Over time, incremental bumps to your contributions can substantially enhance your retirement savings. 

Understanding legislative changes 

America’s population is aging quickly. That means retirement savings will continue to be a hot-button issue on Capitol Hill and in state houses around the country. 

Recent legislation has brought significant changes to retirement contribution rules. One example is the SECURE 2.0 Act, passed by Congress in 2022. It allowed for: 

• Super Catch-Up Contributions: Starting in 2025, individuals aged 60 to 63 can make increased catch-up contributions to their 401(k) plans. This provision aims to help those nearing retirement age to bolster their savings.  

• Roth Catch-Up Contributions for High Earners: Beginning in 2026, catch-up contributions for high earners (those earning over $145,000) must be made to Roth accounts, meaning contributions will be made with after-tax dollars, but qualified withdrawals will be tax-free.

You don’t need to be a Beltway news buff to benefit. Your financial advisor tracks these changes at the national and state levels and what they mean for your plans. Keep in touch with your advisor to discuss and update your strategy. 

Tax considerations 

Understanding the tax implications of your retirement contributions is essential: 

• Contributions to traditional IRA accounts are tax-deductible, reducing your taxable income in the year you contribute. However, withdrawals in retirement are taxed as ordinary income, at your tax rate in the year you withdraw. 

• Contributions to Roth IRA accounts are made with after-tax dollars, providing no immediate tax benefit in the year you contribute. However, qualified withdrawals in retirement are tax-free in the year you withdraw. 

As you can see, the best strategy depends on the difference between your tax bracket today and what you anticipate it will be in retirement. 

 Three mistakes to avoid 

Retirement planning takes foresight and strategy, but the best approach is quite simple: Take advantage of every opportunity, and stay informed over the long haul. Here are three common mistakes to look out for: 

1. Neglecting employer matches: Many employers support their teams’ financial wellness by matching a certain percentage of their retirement contributions. If you don’t contribute enough to get your employer’s full matching contribution, you’re leaving free money on the table. Check with your HR or Benefits department and ensure you’re contributing at least enough to maximize any available match from your company. 
2. Ignoring contribution limits: Contributing beyond IRS limits can result in penalties. Stay informed about annual limits and adjust your contributions accordingly. 
3. Overlooking account fees: High fees can erode your savings over time. Review your account statements and consider low-cost investment options to minimize costs. 

Start as soon as you can 

While tax strategies and catch-up contributions are important, the most beneficial move is to start saving as soon as you can. 

After clearing away any high-interest debt, we advise saving as much as possible, as early as possible. The power of compound interest means those early dollars have a massive impact by the time retirement rolls around. As one example, assuming an annual growth rate of 8%, $5,000 invested annually from ages 25-35 will outperform $5,000 invested annually from ages 35-65. And it’s not even close: in this example, the early investor gains over $170,000 more than the late investor. 

If you can advise younger family or friends, encourage them to set up their own retirement contributions today. It’s no exaggeration to say your advice could have a generational impact. 

Though this last tip benefits young adults the most, there’s good news for us all: It’s never too late to add to your savings. By taking a proactive approach and partnering with your financial advisor on the moves in this guide, you can head into retirement with confidence.