Increase your savings with higher 2026 retirement plan contribution limits
Saving enough each year for retirement is the most important thing employees can do towards becoming retirement ready, followed by investing consistently with their life stage and other goals. Not everyone needs to save up to the IRS maximum retirement plan savings limits, but some should save up to the limits (or more, outside of a retirement plan) in order to meet their retirement readiness goals.
Employees should pay themselves first by saving an appropriate amount into your retirement account and avoid being one of many people who are unable to retire when or at the lifestyle they want due to under-saving.
Retirement account savings limits can increase yearly, giving you an opportunity to save more. Below are the IRS adjusted contribution limits for 401(k), 403(b), and 457 plan contributions and IRA (Individual Retirement Accounts):
2026 Contribution limits
| Limit Description | IRC Code | 2026 Limit | 2025 Limit | Difference |
| Elective deferrals (401(k), 403(b), most 457 plans) | §402(g)(1) | $24,500 | $23,500 | $1,000 |
| Catch‑up contributions (age 50+) | §414(v)(2)(B)(i) | $8,000 | $7,500 | $500 |
| Catch‑up contributions (age 60-63, SECURE 2.0 super catch-up) | §414(v)(2)(E)(i) | $11,250 | $11,250 | $0 |
| SIMPLE IRA plan deferral limit | §408(p)(2)(E)(i)(III) | $17,000 | $16,500 | $500 |
| SIMPLE IRA plan catch‑up for age 50+ | §414(v)(2)(B)(ii) | $4,000 | $3,500 | $500 |
| IRA annual contribution limit (Traditional + Roth combined) | §219(b)(5)(A) | $7,500 | $7,000 | $500 |
| IRA catch‑up contribution (age 50+) | §219(b)(5)(B)(ii) | $1,100 | $1,000 | $100 |
| HSA – Individual | $4,400 | $4,300 | $100 | |
| HSA – Family | $8,750 | $8,550 | $200 |
For additional information see the IRS website: https://www.irs.gov/pub/irs-drop/n-25-67.pdf
Younger employees are not saving enough, early enough
Research shows that during 2024, only 14% of participants saved the maximum allowed amount for that year. Also, retirement plan participation rates were “lowest for employees younger than 25. Only 54% of younger workers elected to contribute to their employer’s plan, while more than 8 in 10 employees between ages 35 and 64 made such deferrals.”*
Increase savings through automatic savings increases
Many plans offer a participant driven automatic default or optional feature to gradually and automatically increase savings rate over a number of years. If an employee isn’t able to make a big jump in savings levels now into their retirement plan, automatically increasing their savings each year by 1-2% or more, can lead to a big impact over time, without needing to remember to make the change each year. If automatic escalation is not already in place, contact the customer service group of your retirement plan provider to ask them how to turn it on.
Save at levels consistent with your retirement goals
Deciding how much to increase the savings levels is easier if you have clear retirement goals, as well as other goals such as saving for a down payment or creating an emergency savings account. However, not everyone is clear yet about those goals. Contributing up to the allowable limits may not always be the answer, so here are a few good general rules of thumb to get you started:
- Always save enough to capture your full company match each year, if a match is offered. A match is free money, and the participant can’t get that opportunity back after it passes. Also, some plans require that people save the right minimum amount each pay period in order to capture the match, vs. making a bigger contribution during the year.
- If retirement goals aren’t clear yet, simply stretch to save as much as they can now, and then adjust that savings level up or down as your retirement goals become clearer. Don’t wait to start saving more later, most pre-retirees wish they had saved more sooner.
- Generally, plan participants should save at least 10% of their income into their retirement plan yearly, but that may not be enough if they didn’t start saving at an early age, or if they plan to retire early, or may live longer than average, or if have high spending goals during retirement.
- Consider the 50/30/20 Needs/Wants/Savings budgeting rule, which suggests spending 50% on needs, 30% on wants, and 20% on savings. Within savings, a portion could be the 10% for retirement savings suggested above, or 15%, plus a combination of savings towards a down payment on a home purchase, emergency savings, a “529” college savings account, and/or other needs.
The risk of delaying retirement savings
Many workers delay retirement savings and then save too little. Delaying savings is a risk for many reasons, especially as they start to earn more. The earlier they start and the more you save, the greater the power of compounded interest. If they wait to save, time works against them, and much larger savings levels will be required later in life to get to the same retirement nest-egg goal… or they may have to work longer and/or spend less in retirement. If they aren’t convinced, ask this simple question to older family members or friends or workers at your company: “Do you wish you had started saving more and earlier into the retirement plan?” The vast majority of people will say yes, and will encourage them to get started saving more and sooner.
*Research from How America Saves 2025, a report by Vanguard.
The information provided herein is for informative and educational purposes only. The use of hyperlinks to third party websites is not an endorsement of the third party. Third party content has not been independently verified. To understand how this content may apply to you, please contact a financial advisor.
