A recent survey found that 21% of workers are very confident about having enough money to live comfortably through their retirement years. At the same time, 32% are not confident.1
Worried that you’ve fallen behind with your retirement savings? It’s not too late to make up for lost time. Even if you have neglected retirement planning in the past, you can seize the moment and get your retirement savings in play again.
Assess Your Current Retirement Savings and Retirement Income Needs
Start with an honest assessment of where you stand now. If you haven’t set a retirement savings goal, take the time to do it. Estimate how much annual income you’ll need to live comfortably after you retire. Sources other than your savings, such as Social Security, may provide some of that income. Your goal is to build up enough savings to cover your remaining income needs for all the years you expect to be retired.
Next, look at how much you have already saved for retirement and try to estimate how much that balance might grow between now and your retirement. Then, focus on making up the difference of the estimated retirement income you’ll need and your estimated savings.
It may require you to do without certain things now in order to put money away for your future. Try to maximize your plan contributions each year.
Consider Catch-Up Contributions
In 2001 congress passed a law that can help older workers make up for lost time. But few may understand how this generous offer can add up over time.2 The “catch-up” provision allows workers who are over age 50 to make contributions to their qualified retirement plans in excess of the limits imposed on younger workers.
Contributions to a traditional 401(k) plan are limited to $23,500 in 2025. Those who are over age 50 – or who reach age 50 before the end of the year – may be eligible to set aside up to $31,000 in 2025. Those between the ages of 60 and 63 have the option to make additional contributions up to $34,750.3
Setting aside an extra $7,500 each year into a tax-deferred retirement account has the potential to make a big difference in the eventual balance of the account, and by extension, in the eventual income the account may generate.
To learn more about how much you can contribute and what your investment options are, check the information your plan provides or reach out to the Trust Point team for overall financial planning needs.
Sources:
1. EBRI.org, 2024
2. Economic Growth and Tax Relief Act of 2001
3. IRS.gov, 2025. Catch-up contributions also are allowed for 403(b) and 457 plans. Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73.
