Come 2025, 401(k) contribution limits will increase to $23,500, offering greater tax-deferred savings opportunities, particularly for those 60 and older who can contribute up to $34,750.
According to Vanguard's 2024 report, just 14% of participants maxed out their 401(k) savings in 2023, primarily benefiting higher earners and longer-tenured employees.
While the new limits offer savings potential, the majority of private sector workers remain dependent on Social Security due to inadequate retirement savings.
The catch-up contribution limit for those aged 60 to 63 will increase to $11,250 under the new guidelines, significantly boosting their retirement saving capabilities.
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